Payment and Delivery System Reform in Medicare: A Primer on Medical Homes, Accountable Care Organizations, and Bundled Payments

Nov 17, 2016 by Susan Baseman, Cristina Boccuti, Marilyn Moon, Shannon Griffin, and Tania Dutta

Kaiser Family Foundation 

The Affordable Care Act (ACA) established several initiatives to identify new payment approaches for health care that could lead to slower spending growth and improvements in the quality of care.  Many of these new delivery system reforms are currently being implemented and tested in traditional Medicare.  This Primer describes the framework and concepts of three broad alternative payment models—medical homes, ACOs, and bundled payments—and reviews their goals, financial incentives, size (number of participating providers and beneficiaries affected), and potential beneficiary implications.  It also summarizes early results with respect to Medicare savings and quality.


Delivery system reform in Medicare focuses on shifting a portion of traditional Medicare payments from fee-for-service (FFS) (which reimburses based on the number of services provided) to payment systems that incorporate some link to the “value” of care as determined by selected metrics, such as patient outcomes and Medicare spending.  The Department of Health and Human Services has announced a goal to have 90 percent of traditional Medicare payments linked to quality or value by 2018.1  The agency also reports that it has met its goal of having 30 percent of Medicare payments tied specifically to alternative payment models (such as Accountable Care Organizations (ACOs), bundled payments, and medical homes) by the end of 2016, and expects to reach 50 percent by the end of 2018.2  Additionally, recent legislation to reform Medicare payments for physician services, the Medicare Access and CHIP Reauthorization Act (MACRA), includes bonus payments for physicians and other health professionals who participate in qualifying alternative payment models.3

To establish a central place for designing, launching, and testing new payment models, the ACA created the Center for Medicare and Medicaid Innovation (CMMI), also referred to as the “Innovation Center,” housed within CMS.  The ACA granted CMMI wide authority to design and test new models that aim to either lower spending without reducing the quality of care, or improve the quality of care without increasing spending.4  The intent of designing and launching multiple new models is that the cream of all of these approaches will rise to the top, providing direction as to what works and what does not—so best practices can be quickly disseminated across the country.  In fact, the ACA gives CMMI unprecedented authority to expand models across the U.S. when they are found to be successful.

(executive summary to article continues at Kaiser Family Foundation webpage URL link below):

Tags: Medicare Payment and Delivery System Reform, Kaiser Family Foundation, CMS

Log on to Your Rise Account

Forgot your password?
Create an Account


Latest Posts

CMS Gives EDPS Transition Some Breathing Room

CMS published the final call letter for 2018 yesterday, April 3, which included a welcome accouncement regarding the transition from RAPS to EDPS-based RAF scores. Citing numerous public comments on the subject, CMS throttled back the speed with which they plan to switch over to an encounter-based methodology. Instead of the blended rates originally contemplated, they announced that the more modest blend of 85% RAPS to 15% EDPS would be used in 2018, allowing more time to improve the reliability of the encounter data methods. While the RISE data collaboration study was not cited, we believe that the educational value of our study, along with our communication and advocacy of a more moderate approach by CMS, contributed to the confidence with which plans and other interested parties spoke up during the open comment period. Once again, we owe thanks to the folks at Avalere and Inovalon, as well as at AHIP, for the collegial and professional collaboration. Also, we want to thank the health plans that actively participated in our study for making this work possible. ...
Read More

Take Aways from RISE Nashville Summit

The 11th Annual RISE Nashville Summit continued the event’s tradition of yearly growth. The return to downtown Nashville was widely applauded by attendees, who were glad to be back near Broadway’s nighttime funk and fun. While festive, this year's event occurred in the wake of the new administration in Washington, D.C., and the healthcare themes surrounding the "repeal and replace" of the Affordable Care Act (ACA) cast a long shadow. In contrast to the upbeat, confident notes struck by last year’s keynote speaker Senator Tom Daschle, this year’s sobering keynote address by Howard Fineman, NBC/MSNBC political analyst, The Huffington Post Media Group global editorial director, and bestselling author, was an assessment of the pluses and minuses of our new president. Mr. Fineman's remarks indicated that the political alliances in power will seek to undo what Senator Daschle viewed as "irreversible” a year ago....
Read More

Upcoming Conference


Qualipalooza: The 2nd Annual RISE Quality Leadership Summit 

This unique event incorporates three conferences presented side-by-side: the Star Ratings Strategic Planning Forum, the HEDIS Forum, and the CAHPS, HOS & Member Survey Forum. Register for one conference for an in-depth examination of a single area, or design your own event by opting for the all-access pass and choosing the sessions from each conference which correspond exactly to your interests.


Upcoming Webinar

The Impact of Quality Incentive Models in Medicaid Markets


Thirty-one of our fifty states now have Medicaid managed care, and several markets are expected to implement managed care in the next few years. More than $160B in Medicaid spending occurs through the Managed Care Organizations. As more and more states seek to do more with less, increasing accountability for health quality outcomes is placed on health plans. Join this webinar to learn the typical quality payment approaches states use, issues often faced by health plans under each model and what states are expected to do with payment models tied to quality performance in light of near term Medicaid reform efforts.


Connect With Us

Copyright © 2014 Resource Initiative & Society for Education. All rights reserved.