Annual Performance Plan and Report

Topics on this page: Goal 1. Objective D | Table of Related Performance Measures | Analysis of Results | Plans for the Future | Objective Progress Update Summary

Goal 1. Objective D: Reduce the growth of healthcare costs while promoting high-value, effective care

Healthcare costs can consume an ever-increasing amount of our Nation’s resources, straining family, business, and government budgets. In the United States, the sources of inefficiency that are leading to rising healthcare costs include payment systems that reward medical inputs rather than outcomes, contain high administrative costs, and lack focus on disease prevention. The Affordable Care Act provides the framework to make healthcare safer and less costly.

As part of health reform implementation, HHS is lowering costs for American families and individuals through insurance market reforms that ensure that preventive care is available for all Americans and builds on improving the quality of care. HHS is transforming Medicare from a system that rewards volume of service to one that rewards efficient and effective care, reduces delivery system fragmentation, and better aligns reimbursement rates with provider costs. AHRQ, CDC, CMS, HRSA, IHS, NIH, and ONC each play a distinct role in achieving this objective. HHS has identified the following measures as indicators for reducing healthcare costs while promoting high-value, effective care. The Office of the Secretary led this Objective’s assessment as a part of the Strategic Review.

Objective 1.D Table of Related Performance Measures

Increase the number of Medicare beneficiaries who have been aligned with Accountable Care Organizations (Lead Agency - CMS; Measure ID - ACO1.1)

Increase the number of physicians participating in an Accountable Care Organization (Lead Agency - CMS; Measure ID - ACO1.2)

Increase the percentage of Accountable Care Organizations that share in savings (Lead Agency - CMS; Measure ID - ACO1.3)

Reduce all-cause hospital readmission rates for Medicare beneficiaries by one percent over the previous year's target rate (Lead Agency - CMS; Measure ID - MCR26)

Amount of savings by state AIDS Drug Assistance Programs (ADAPs) participation in cost savings strategies on medications. (Lead Agency - HRSA; Measure ID - 16.E)

Analysis of Results

As part of the delivery system reform process, we aim to increase the number of Medicare beneficiaries who have been aligned with ACOs, the number of physicians participating in ACOs, and the percentage of ACOs that share in savings (ACO measures 1.1-1.3). In 2013, more than 4 million beneficiaries were aligned to ACOs (3,394,587 Medicare SSP and 607,945 Pioneer), with the expectation of increasing alignment to more than 7 million beneficiaries during the 2015 performance year. Just over 100,000 physicians participated in an ACO in 2013 (83,877 Medicare SSP and 18,840 Pioneer). In the 2015 performance year, CMS expects physician participation to increase by almost 80 percent to 178,000 physicians. CMS also established a baseline for the percentage of ACOs that share in savings of 34 percent. Given this percentage will be limited in its second year ACO performance, and the fact that the Shared Savings Program expects ACO second year participation to nearly triple by the end of 2015 to 335 ACOs, we anticipate modest growth in the total number of ACOs that will share in savings at 35 percent in performance year 2014 and 37 percent in performance year 2015 respectively. The FY 2016 targets for ACO measures 1.1-1.3 are to be determined (TBD). We will determine new targets by September 30, 2015.

In order the reduce Medicare expenditures and improve patient quality, CMS tracks preventable Medicare inpatient hospital readmissions. A hospital readmission occurs when a patient who has recently been discharged from a hospital (within the last 30 days of the admission) is once again readmitted to a hospital. Discharge is a critical transition in a patient’s care and incomplete handoffs at discharge can lead to costly adverse events and avoidable re-hospitalizations. In 2013 CMS established the Hospital Readmissions Reduction Program, which will reduce a portion of Medicare’s payment to certain hospitals based on the hospital’s excess Medicare readmissions for specific conditions. In addition, CMS leverages other efforts including Partnership for Patients to reduce preventable complications during a transition, as well as partnerships with the Community-Based Care Transitions Program and Quality Improvement Organizations. CMS exceeded the CY 2014 target for this goal, with readmission rates reduced to 18.1 percent.

HRSA supports state AIDS Drug Assistance Programs (ADAPs), through the Ryan White HIV/AIDS program, to provide assistance to low-income persons living with HIV/AIDS who have limited or no access to needed medications. State ADAPs use a variety of strategies to contain costs and achieved savings of more than $989.8 million in FY 2012 — an increase in drug cost savings of more than $373.7 million over the previous year.

Plans for the Future

Leveraging the innovative model of ACO is a key part of promoting healthcare cost savings through the Affordable Care Act. As part of the delivery system reform process, CMS will aim to increase the number of Medicare beneficiaries who have been aligned with ACOs and increase the number of physicians participating in ACOs. Given the percentage of ACOs sharing in savings is limited to second year ACO performance, and the fact that the Shared Savings Program expects ACO participation to nearly triple by the end of 2015 to 335 ACOs, CMS also expects the percentage of ACOs that share in saving will increase modestly in the coming years.

CMS uses a number of programs to reduce hospital readmissions, as described above. CMS’s efforts to reduce readmissions also extend to ACOs, which must report on 33 quality measures if they wish to receive incentives under the Medicare FFS Shared Savings Program. CMS expects to meet or exceed the CY 2015 target for this goal. Data used to assess future targets will include admissions data that reflects hospitals’ experiences under and resulting from CMS's efforts aimed at reducing hospital readmissions. The CY 2015 target is set at 18.1 percent, one percent under the CY 2014 target rate and for CY 2016 the target is set at 17.9 percent, once percent under the CY2015 target. The readmission rate will be updated annually. CMS will continue to improve hospital performance and reduce readmissions with the long-term aim to reduce the growth of health care costs, while promoting high-value, effective care.

State ADAPs will continue to use a variety of strategies to contain medication costs, potentially enabling ADAPs to serve more people. Moving forward, HRSA plans to use the previous year’s result as the subsequent year’s target.

Objective Progress Update Summary

HHS demonstrated progress toward this objective as shown by the representative performance measures described in the HHS Annual Performance Plan and Report. Further evidence of progress is described below.

• CMS’ efforts to reduce readmissions also extend to Accountable Care Organizations (ACOs).  ACOs must report on and meet targets for 33 quality measures in order to receive shared savings under the Medicare Fee-for-Service Shared Savings Program.  Unlike most measures that only have a reporting requirement in year one, CMS targets reduction of all-cause Medicare hospital readmissions by one percent per year, beginning with a baseline of 18.7 percent on CY 2010 data set in FY 2012.  Based on CY 2011 fee-for-service inpatient claims data, the Medicare all-cause hospital readmission rate is estimated to be 18.6 percent, which falls slightly above the 2013 target of 18.5 percent.  The 2014 target was set at 18.3 percent. Despite not successfully achieving the 2013 target, CMS met the 2014 target for this goal, resulting in 18.1 percent reduction.
• In the Ryan White HIV/AIDS Program, state AIDS Drug Assistance Programs (ADAP) use a variety of strategies to maximize resources, which results in a more effective use of funding and enables ADAPs to serve more people. In 2012, state ADAPs participating in cost-savings strategies on medications saved $989.8 million, exceeding the FY 2012 target by $373.7 million. Since FY 2008, state ADAPs have saved over $3 billion on medications.
• The Community Preventive Services Task Force compiles systematic reviews of the evidence in The Community Guide (www.thecommunityguide.org). The Community Guide provides evidence-based recommendations and findings about community preventive services, programs, and policies to improve health. The Duval County Health Department in Jacksonville, Florida implemented Task Force Community Guide recommendations to improve appropriate vaccination and within one year saw the percentage of 2-year-olds with complete immunization records rise from 75 percent to the national target of 90 percent.
• Adoption of E-prescribing technologies has been an HHS priority because available evidence suggests positive impacts on reducing the growth of health care costs. HHS programs, such as the CMS Electronic Prescribing Incentive Program, the CMS Electronic Health Record (EHR) Incentive Programs, and the ONC state Health Information Exchange Program have brought focused attention to the issue and enabled federal leverage. Since December 2009, the rate of e-prescribing via an EHR among physicians increased from 16 to 65 percent Since December 2009, the percent of community pharmacies actively e-prescribing increased from 80 to 96 percent.

The Department is continuing to support and execute the programs contributing to this objective, monitoring progress, performance, and program integrity while adjusting to any budgetary constraints or changes to programmatic demands.