By Kelsey Berry
Whereas “allocation of scarce resources” is a buzz phrase that inspires a great deal of distress and desire for good ethical argument, “waste avoidance” strikes us as a relatively uncontroversial method for containing health care spending. Perhaps this is because rationing implies a trade-off between two individuals, each of whom have the potential to benefit from a possible intervention, whereas waste avoidance, on the other hand, implies a trade-off between two services – one of which has the capacity to benefit an individual, and the other which does not. Surely the latter trade-off is preferable, and perhaps even imperative, to make before we take up the former. This week U.S. Secretary of Health and Human Services Sylvia Burwell signaled a commitment to making the latter trade-off in her announcement on a complex area of health care financing: Medicare payment & payment reform. Medicare payment is one of the few levers that the federal government has relatively direct control over when it comes to controlling health care spending, and Burwell’s announcement was a welcome change in the policy discourse from the oft-lamented “doc fix”/SGR debacle (a fix for which was just bypassed again).
In her announcement and this perspectives piece in NEJM, Burwell set goals to (1) move 50% of Medicare payments to alternative payment models such as Alternative Care Organizations (ACOs) and bundled payment arrangements by 2018, and (2) tie 90% of all Medicare payments made under the traditional fee-for-service model to quality or value, through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs, by 2018. Notably, these are the first explicit goals for transitioning to alternative payment models and value-based payments that have been set in the history of the Medicare program – though it remains to be seen how these goals will be pursued.