DEPARTMENT OF HEALTH & HUMAN SERVICESCenters for Medicare & Medicaid ServicesRoom 352-G200 Independence Avenue, SWWashington, DC 20201CMS FACT SHEETFOR IMMEDIATE RELEASEJanuary 26, 2015Contact: CMS Media Relations(202) 690-6145 [email protected] Care, Smarter Spending, Healthier People: Improving Our Health Care Delivery SystemUpdated January 26, 2015Improving the quality and affordability of care received by Americans is, alongside increasing access toit, a core pillar of the Affordable Care Act. The Administration is working to ensure that Americansreceive better care; that we spend our health care dollars more wisely; and that we have healthiercommunities, a healthier economy, and ultimately, a healthier country. This means finding better waysto deliver care, pay providers, and share and utilize information.The Affordable Care Act offers many tools to improve the way providers are paid to reward quality andvalue instead of quantity, to strengthen care delivery by better integrating and coordinating care forpatients, and to make information more readily available to consumers and providers. Doing so willimprove the coordination and integration of health care, engage patients more deeply in decision-makingand improve the health of patients – with a priority on prevention and wellness.It is our role and responsibility to lead this change, and we will lead. At the same time, we understandthe importance of engaging partners who are also committed to improving our health care system.Patients, physicians and other providers, government, and businesses all have a stake in this effort.Significant progress has already been made, thanks to the Affordable Care Act, and other efforts areunderway.Health care cost growth has slowedThe United States is in the midst of a sustained, historic slowdown in the growth of health care costs.The years 2011, 2012, and 2013 saw the slowest growth in real per capita national health expenditureson record, spurred by slow growth in per-beneficiary spending throughout our health care system,including Medicare, Medicaid, and private insurance. Slow growth in the cost of health care continuedin 2014, even as millions gained coverage. The average premium for employer-based family coverageincreased just 3 percent in 2014, according to the Kaiser Family Foundation, tied for the smallestincrease since the Kaiser survey began in 1999. Medicare spending per beneficiary was approximatelyflat in fiscal year 2014, and from 2010 to 2014, Medicare spending per beneficiary grew at a rate thatwas 2 percentage points per year less than growth in GDP per capita. Looking forward, due primarily to1

the persistent slowdown in health care costs, the Congressional Budget Office now estimates thatFederal spending on Medicare and Medicaid in 2020 will be 188 billion below what it projected asrecently as August 2010.Health outcomes are improving and adverse events are decreasingSince 2011, patient safety has improved dramatically, thanks in part to the Partnership for Patients (seebelow). Patient harm has fallen by 17%, saving 50,000 lives and billions of dollars. As one example,clinicians at some hospitals have reduced their early elective deliveries to close to zero, meaning fewerat-risk newborns and fewer admissions to the neonatal intensive care units.In 2012, we implemented an Affordable Care Act program that ties Medicare payment for hospitals toreadmission rates for certain conditions, i.e. the percentage of patients that have to return to the hospitalwithin 30 days of being discharged. After holding constant at 19 percent from 2007 to 2011 anddecreasing to 18.5 percent in 2012, the Medicare all-cause 30-day readmission rate has further decreasedto approximately 17.5 percent in 2013. This translates into an 8 percent reduction in the rate and anestimated 150,000 fewer hospital readmissions among Medicare beneficiaries between January 2012 andDecember 2013.Providers are engagedThe Innovation Center is charged with testing innovative payment and service delivery models to reduceexpenditures in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), and at thesame time, preserving or enhancing quality of care. Already the Innovation Center is engaged in projectswith more than 60,000 health care providers to improve care, and an estimated 2.5 million Medicare,Medicaid and CHIP beneficiaries are receiving care through the Innovation Center’s payment andservice delivery models.For example, in 2012, Medicare Accountable Care Organizations (ACOs) began participating in theMedicare Shared Savings Program and the Pioneer ACO. These programs encourage providers to investin redesigning care for higher quality and more efficient service delivery, without restricting patients’freedom to go to the Medicare provider of their choice.There are 424 organizations currently participating in the Medicare ACOs, serving over 7.8 millionMedicare beneficiaries. As existing ACOs choose to add providers and more organizations join theShared Savings Program, participation in ACOs is expected to grow. Medicare ACOs participating inthe Shared Savings Program and the Pioneer ACO Model combined generated over 417 million insavings for Medicare.Medicare beneficiaries are shopping for coverage according to qualityThe Affordable Care Act ties payment to private Medicare Advantage plans to the quality ratings of thecoverage they offer. Since those payment changes have been in effect, more seniors are able to choosefrom a broader range of higher quality Medicare Advantage plans, and more seniors have enrolled inthese higher quality plans as well.2

Approximately 40 percent of Medicare Advantage contracts received four or more stars in 2015, whichis an increase from 6 percent in 2013. About 60 percent of Medicare Advantage enrollees are currentlyenrolled in plans with four or more stars for 2015, an increase of approximately 31 percentage pointscompared to the percentage in four or five star plans for the 2012 ratings.Below are specific examples of reforms and investments that help build a health care delivery systemthat better serves all Americans.INCENTIVES: PAYING FOR VALUE: Hospitals. Two important programs that reward hospitals based on the quality of care they provide topatients began in 2012, and a third was initiated in 2014. Hospital Value-Based Purchasing Program. This program links a portion of hospitals’Medicare payments for inpatient acute care to their performance on important quality measures.Examples of measures include whether a patient received an antibiotic before surgery, and howwell doctors and nurses communicate with patients. For FY 2015, as directed by the law, CMSincreased the applicable percent reduction, the portion of Medicare payments available to fundthe value-based incentive payments under the program, from 1.25 to 1.5 percent of the baseoperating DRG payment amounts to all participating hospitals. Hospital Readmissions Reduction Program. This program reduces Medicare payments tohospitals with excess readmissions beginning October 2012 to encourage patient safety and carequality. In FY 2015, the maximum reduction in payments under the Hospital ReadmissionsReduction Program increased from 2 to 3 percent of base discharge amounts, as required by law.CMS will assess hospitals’ readmissions penalties using five readmissions measures endorsed bythe National Quality Forum. Hospital-Acquired Condition Reduction Program. This program, authorized by the AffordableCare Act, began in October 2014 and reduces Medicare payments for some hospitals that rank inthe worst performing quartile with respect to hospital-acquired conditions (HACs), which isdetermined based on the hospital’s performance on three quality measures (Patient SafetyIndicator 90 composite, central-line associated bloodstream infection and catheter associatedurinary tract infection). Additional safety measures for measures such as surgical site infectionsand methicillin resistant staph aureus infections have been added for future years. Dialysis Facilities. The End-Stage Renal Disease (ESRD) Quality Incentive Program ties Medicarepayments directly to facility performance on quality measures, resulting in better care at lower cost forover 503,000 Medicare beneficiaries with end stage renal disease. In addition, a new comprehensivecare model announced in January 2013 will test a new payment and service delivery approach toimprove care for ESRD beneficiaries, by coordinating primary care with care for their special healthneeds. Testing New Payment Models: The Innovation Center is testing innovative payment and servicedelivery models that are already seeing results.3

Pioneer Accountable Care Organization Model. Nineteen ACOs are currently participating inthe Pioneer ACO Model, which is designed for health care organizations and providers that arealready experienced in coordinating care for patients across care settings. Preliminary resultsfrom the independent evaluation of the Pioneer ACO Model show that Pioneer ACOs havegenerated gross savings of 147 million in their first year. During the second performance year,Pioneer ACOs generated estimated total model savings of over 96 million and savings to theMedicare Trust Funds of approximately 41 million. Pioneer ACOs also outperformed publishedquality benchmarks in year one and improved in almost all quality and patient experiencemeasures in year two. When combined with ACOs in the Medicare Shared Savings Program,there are 424 organizations currently participating in the Medicare ACOs, and these twoprograms combined generated over 417 million in savings for Medicare since 2012. Bundled Payments for Care Improvement initiative. The initiative currently has 105 Awardeesin Phase 2 (risk-bearing), including 38 conveners of health care organizations, representing 243Medicare organizational providers. Additionally within Phase 1 of the initiative are 870participants, including 138 conveners of health care organizations, representing 6,424 Medicareorganizational providers. They are testing how bundling payments for episodes of care can resultin more coordinated care for Medicare beneficiaries and lower costs for Medicare. Bundlingpayment for services that patients receive across a single episode of care, such as heart bypasssurgery or a hip replacement, is one way to encourage doctors, hospitals and other health careproviders to work together to better coordinate care for patients, both when they are in thehospital and after they are discharged. Health Care Innovation Awards. The Health Care Innovation Awards Round One are fundingup to 1 billion in awards to 107 organizations across the country that are implementing the mostcompelling new ideas to deliver better health, improved care and lower costs to people enrolledin Medicare, Medicaid and CHIP. The Health Care Innovation Awards Round Two are fundingup to 360 million to 39 organizations to test new payment and service delivery models.CARE DELIVERY: PROMOTING BETTER CARE AND PROTECTING PATIENT SAFETY: Comprehensive Primary Care Initiative. The Innovation Center is currently testing the ComprehensivePrimary Care Initiative (CPC), which is a multi-payer partnership between Medicare, Medicaid privatehealth care payers, and primary care practices in four states (Arkansas, Colorado, New Jersey andOregon) and three regions (New York’s Capital District and Hudson Valley, Ohio and Kentucky’sCincinnati-Dayton region, and Oklahoma’s Greater Tulsa region). This initiative includes providing caremanagement for those at greatest risk; improving health care access; tracking patient experience;coordinating care with hospitals and specialists; and using health information technology to supportpopulation health. Practices receive non-visit based care management fees from the participating payers,and the opportunity to share in savings. Results from the first year suggest that CPC has generatednearly enough savings in Medicare health expenditures to offset care management fees paid by CMS,with hospital admissions decreasing by 2% and emergency department visits by 3%. Results should beinterpreted cautiously as effects are emerging earlier than anticipated, and additional research is neededto assess how the initiative affects cost and quality of care beyond the first year.4

Multi-Payer Advanced Primary Care Initiative. The Innovation Center is currently testing the MultiPayer Advanced Primary Care Practice (MAPCP), which is a multi-payer initiative in which Medicare isparticipating with Medicaid and private health care payers in eight advanced primary care initiatives inMaine, Michigan, Minnesota, New York, North Carolina, Pennsylvania, Rhode Island, and Vermont.Under this demonstration, participating practices and other auxiliary supports (e.g., community healthteams) receive monthly care management fees from the participating payers and additional support (e.g.,data feedback, learning collaboratives, practice coaching). More than 3,800 providers, 700 practices, and400,000 Medicare beneficiaries participated in the first year. Unlike CPC, the eight states participatingin MAPCP convene the participants and administer the initiatives rather than CMS. During the firstyear, the demonstration produced an estimated 4.2 million in savings. Also, the rate of growth inMedicare FFS health care expenditures was reduced in Vermont and Michigan, driven largely byreduced growth in inpatient expenditures. Partnership for Patients. The nationwide Partnership for Patients initiative, launched in April 2011with funds provided by the Affordable Care Act, aims to save 60,000 lives by averting millions ofhospital acquired conditions over three years by reducing complications and readmissions andimproving the transition from one care setting to another. At the core of this initiative are 26 HospitalEngagement Networks, which work with 3,700 hospitals (representing 80% of the Americanpopulation), working with health care providers and institutions, to identify best practices and solutionsto reducing hospital acquired conditions and readmissions. As of December 2014, an HHS report showsan estimated 50,000 fewer patients died in hospitals and approximately 12 billion in health care costswere saved as a result of a reduction in hospital-acquired conditions from 2010 to 2013. Preliminaryestimates show that in total, hospital patients experienced 1.3 million fewer hospital-acquired conditionsfrom 2010 to 2013. This translates to a 17 percent decline in hospital-acquired conditions over the threeyear period. Supporting practice transformation. In October 2014, CMS announced the Transforming ClinicalPractice Initiative (TCPI), which is designed to help clinicians achieve large-scale health transformationthrough an over 800 million investment. Specifically, the initiative is designed to support 150,000clinician practices over the next four years in sharing, adapting and further developing comprehensivequality improvement strategies. TCPI is one of the largest federal investments uniquely designed tosupport clinician practices through nationwide, collaborative, and peer-based learning networks thatfacilitate large-scale practice transformation. Healthy infants. The Strong Start for Mothers and Newborns initiative, announced in February 2012,aims to reduce early elective deliveries as well as test models to decrease preterm births among high-riskpregnant women in Medicaid and the Children’s Health Insurance Program (CHIP). The initiative buildson the work of the Partnership for Patients, testing ways to support providers in reducing early electivedeliveries. It also provides over 11.7 million to 27 awardees to test enhanced prenatal careinterventions to lower the risk of preterm birth among pregnant women with Medicaid or CHIP. As partof this initiative, clinicians at some hospitals have reduced their early elective deliveries to close to zero,meaning fewer at-risk newborns and fewer admissions to the neonatal intensive care unit. From 2010 to2013, there was a reduction of 64.5 percent in early elective deliveries, reflecting the collaborativeefforts of providers, private sector organizations, and government toward the shared goal of improvedbirth outcomes.5

Better coordination of care for beneficiaries with multiple chronic conditions. Under this year’srulemaking, the Medicare Physician Fee Schedule will include a new chronic care management feebeginning next year. This separate payment for chronic care management will support physicianpractices in their efforts to coordinate care for Medicare beneficiaries with multiple chronic conditions.This helps improve the way care is provided by supporting clinicians coordinating care for patients,including outside of regular office visits. Providing states with additional flexibility and resources to enhance care. The State InnovationModels Initiative aims to help states deliver high-quality health care, lower costs, and improve theirhealth system performance. Together with awards released in early 2013, over half of states (34 statesand 3 territories and the District of Columbia), representing nearly two-thirds of the population areparticipating in efforts to support comprehensive state-based innovation in health system transformationaimed at finding new and innovative ways to improve quality and lower costs. Seventeen states arecurrently implementing comprehensive state-wide health transformation plans (Arkansas, Colorado,Connecticut, Delaware, Idaho, Iowa, Maine, Massachusetts, Michigan, Minnesota, New York, Ohio,Oregon, Rhode Island, Tennessee, Vermont and Washington). Integrating care for individuals enrolled in Medicare and Medicaid. Many of the ten millionMedicare-Medicaid enrollees suffer from multiple or severe chronic conditions. Total annual spendingfor their care is approximately 300 billion. Twelve states (California, Colorado, Illinois, Massachusetts,Michigan, Minnesota, New York, Ohio, South Carolina, Texas, Virginia and Washington) have enteredinto agreements with CMS to integrate care for Medicare-Medicaid enrollees. Enrollees participating inthe Financial Alignment Initiative may have access to coordinated services, and some states offerservices that were not available outside of this demonstration, like dental, vision, and community-basedbehavioral health services. These demonstrations are designed to provide enrollees with personcentered, integrated care that provides a more easily navigable and seamless path to accessing and usingservices covered by Medicare and Medicaid. Greater independence for Americans with disabilities and long-term care needs. The Affordable CareAct includes a number of policies to promote non-institutional long-term care programs that will helpkeep people at home and out of institutions: Money Follows the Person Program. The Money Follows the Person Program helps statesrebalance their long-term care systems in part by transitioning Medicaid beneficiaries frominstitutions to the community. As of December 2013, over 40,650 individuals with chronicconditions and disabilities have transitioned from institutions back into the community throughMoney Follows the Person Program. The 44 participating States and DC have proposed totransition an additional 25,816 individuals out of institutional settings through 2016. Balancing Incentive Program. Nineteen states are participating in the Balancing IncentiveProgram, which gives states incentives to increase access to non-institutional long-term servicesand supports and provides new ways to serve more Medicaid beneficiaries in home andcommunity-based settings.6

Health Home State Plan Amendments. Sixteen states have approved Health Home State PlanAmendments to integrate and coordinate primary, acute, behavioral health, and long termservices and supports for Medicaid beneficiaries. Promoting care at home. An Affordable Care Act demonstration, Independence at Home, testswhether providing chronically ill beneficiaries with primary care in the home will help them stayhealthy and out of the hospital. Fourteen primary care practices and three consortia of physicianpractices are participating in the Independence at Home Demonstration.INFORMATION: IMPROVING THE AVAILABILITY OF INFORMATION TO GUIDEDECISION-MAKING Electronic Health Records (EHRs). Adoption of electronic health records continues to increase amongphysicians, hospitals, and others serving Medicare and Medicaid beneficiaries helping to evaluatepatients’ medical status, coordinate care, eliminate redundant procedures, and provide high-quality care.The proportion of U.S. physicians using EHRs increased from 18% to 78% between 2001 and 2013, and94% of hospitals now report use of certified EHRs. Electronic health records likely will help speed theadoption of many other delivery system reforms, by making it easier for hospitals and doctors to bettercoordinate care and achieve improvements in quality. Access to Cost, Charge, and Quality Data: Cost and charge data for hundreds of services (inpatient,outpatient, and physician services) and quality scores for hundreds of thousands of hospitals, physicians,nursing homes, and other providers are now available on the Medicare website. These websites are partof an Administration-wide effort to increase the availability and accessibility of information on quality,utilization and costs for effective, informed decision-making. Physician Compare. Physician Compare, a website created by the Affordable Care Act, helpsconsumers make informed choices about the health care they receive from Medicare physiciansand other health care professionals. Currently, users have the ability to compare the generalinformation for up to three group practices on Physician Compare. This includes names,addresses, distance from the search location, specialty, Medicare assignment, and affiliatedhealth care professionals. The first quality measures were added to Physician Compare inFebruary 2014, and since then, the number of groups reporting quality data through the PhysicianQuality Reporting System (PQRS) has doubled. In 2015, CMS plans to expand PhysicianCompare to include quality performance results for all physician groups. Hospital Compare. Hospital Compare helps consumers make informed choices about the healthcare they receive from hospitals. Hospital Compare has information about the quality of care atover 4,000 Medicare-certified hospitals- across the country and includes measures such as accessto timely and effective care, readmissions, and patient experience, among many others.Beneficiaries also can now find information on the incidence of serious hospital-acquiredconditions in individual hospitals. In FY 2015, hospitals with high rates of hospital-acquiredconditions will see their Medicare payments reduced. Charge Data for Hospital and Physician Services. In May 2013, HHS released for the first timenew data showing variation across the country and within communities on what hospitals charge7

for common inpatient services. The data posted on CMS’s website include informationcomparing the charges for services that may be provided during the 100 most common Medicareinpatient stays. Hospitals determine what they will charge for items and services provided topatients and these “charges” are the amount the hospital generally bills for an item or service.The website also includes data on outpatient charges. In April 2014, CMS updated the hospitaldata and released for the first time comprehensive data on physician utilization and charges inthe Medicare program. Qualified Entity Program. The Qualified Entity (QE) Program, created by the Affordable CareAct, allows organizations approved as qualified entities (QEs) access to Medicare data toproduce public performance reports on physicians, hospitals, and other providers. These reportscombine private sector and/or Medicaid claims data with the Medicare data to identify whichhospitals and doctors provide the highest quality, cost-effective care. QEs must protect theprivacy and security of the Medicare claims data and may use it only for purposes of the QEProgram. To date, CMS has certified 12 regional QEs and one national QE. Two of the regionalQEs, Q-Corp and Health Insight, released public reports using the combined Medicare and otherpayer data in 2014.###8

Jan 26, 2015 · the Pioneer ACO Model, which is designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. Preliminary results from the independent evaluation of the Pioneer ACO Model show that Pioneer ACOs have gen