Industry Insights

Progress Report:  New Medicare Payment Models

May 2015
Author:  Eric Rogers

Eric Rogers

Senior Managing Consultant

Health Care Performance Advisory Services

Health Care

910 E. St. Louis Street, Suite 200
P.O. Box 1190
Springfield, MO 65801-1190 (65806)


The public is getting a look at the progress of the Centers for Medicare & Medicaid Services’ (CMS) efforts to find payment models that reduce the costs of providing service while preserving quality of care for patients.

The CMS Innovation Center was created in 2010 to test “innovative payment and service delivery models to reduce program expenditures … while preserving or enhancing the quality of care.” CMS was given a $10 billion budget to cover testing from 2011 to 2019. Although these models vary in structure, payment and scope, they all share a common litmus test:  reducing spending and improving quality of care.

By December 2014, CMS had spent $2.6 billion, and there are 60,000 providers touching 2.5 million beneficiaries through 22 delivery models; beneficiaries are grouped by the initiatives below:

The CMS Innovation Center provided Congress a progress report of each delivery model in December 2014. The findings come from CMS’ Research and Rapid Cycle Evaluation Group, which has been tasked with “routinely and rigorously” assessing the impact of each model on quality and cost. Statistical comparisons are conducted between participating and nonparticipating health care providers to assess program results and understand the context that allows for those results. Delivery models showing improved patient outcomes or decreased spending will receive continued funding, while models falling short of the mark will expire. 

One model experiencing successful outcomes in quality and value is the Pioneer ACO Model. In a May 4 news release from the U.S. Department of Health and Human Services, an independent evaluation found the Pioneer ACO Model “generated over $384 million in savings to Medicare over its first two years—an average of approximately $300 over participating beneficiary per year—while continuing to deliver high-quality patient care.”

In the last four years, health systems across the country have signed up to participate in CMS-sponsored reform models. Many joined for the short-term financial incentives, while others joined to make fundamental changes in organizational structure and care delivery. CMS is evaluating each model to determine which will address the problems encountered under the current fee-for-service system. These new models of care delivery provide excellent learning opportunities; organizations should educate themselves on the successful models, which will serve as a window into the future of payment reform. 

If you have additional questions about this topic or the future of value-based payment models, contact your BKD advisor.

BKD LinkedIn BKD Twitter BKD Youtube BKD Google Plus