The Center for Medicare and Medicaid Services (CMS) recently, and for the first time, set a timetable for accelerating its payment reforms. It announced that by 2018, half of its Medicare reimbursement will shift away from fee-for-service (FFS) to alternative payment models. These alternative payment models can be found in new care practices such as accountable care organizations (ACO) and Patient-Centered Medical Homes (PCMH).

What surprised me a little is that CMS also shares that by the end of 2014, “value-based payments [already] represented approximately 20 percent of Medicare fee-for-service payments to providers.” Using Medicare benefit payment data in 2013 (the year when the latest data are available), I calculate that the 20 percent equals to about $56 billion. This figure appears high, and I interpret this data as inclusive of any payment that has performance-based payment components, i.e, the whole amount under FFS is counted, even only 5 percent of that total payment is conditional upon meeting certain performance goals.

I am actually more interested in the percentage of spending on alternative payment models as listed in CMS’ categories 3 & 4--for these care models, Medicare holds care providers financially accountable for the outcome of an episodic care, or for the care quality of a patient population under a care provider’s management. CMS did not break them out and my best guess is under 10 percent in 2014. CMS projects that this percentage will rise to 30 percent by end of 2016 and 50 percent by 2018.

From the article "Recent CMS policy goals and legislative moves bode well for healthcare IT adoption" by Harry Wang.

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