A February 2011 Implementation Brief titled “Medicare Quality Measurement and Reporting Programs” addressed Congress’ continuing efforts through the Affordable Care Act (ACA) to transition the Medicare program from a traditional volume-based fee for service purchaser of health care items and services to a value-based purchaser. The ACA took significant steps to move beyond financial and other incentives for quality measure development, measurement, and reporting to financial and other incentives for actual improvements in care delivery (e.g., value-based purchasing). Since the initial 2011 brief, the Centers for Medicare and Medicaid Services (CMS) has made significant progress in implementing Congress’ vision. That progress is described below.

Health care quality represents a constantly recurring theme in U.S. health policy. Traditionally, the Medicare program has paid for health care services on a fee-for-service basis with the exception of inpatient hospital services, which are paid based on Diagnosis Related Groups (DRGs) under the prospective payment system (PPS), and the Medicare Advantage and Prescription Drug plans, which are paid on a capitated basis. All payment systems tend to incentivize something; in the case of fee-for-service, it is indiscriminant increases in volume of services provided, while in case-based or capitation systems it is indiscriminant reductions in volume. The challenge is to promote both quality and value while also apportioning financial risk appropriately. Because Medicare has relied principally on a fee-for-service approach to payment for physician and other services (and even while hospital payments are case-based under the PPS, it does not discourage multiple admissions and readmissions), the program has experienced incredible growth in the volume of services. At the same time, Medicare lacks a program-wide and deliberate approach to promoting quality and value.