By Kathleen Sebelius, Secretary of Health and Human Services
Our current health care system is full of competent and caring doctors, nurses, and other health care professionals working hard to do right by their patients. But the system as a whole just isn't delivering what patients or providers need. Dysfunctional incentives create fragmentation and fail to address the underlying drivers of disease. In addition, far too many decisions are now in the hands of insurance companies, not doctors and patients.
What we need is an approach to health care delivery that is coordinated and patient-centered. And we need to keep people from getting sick in the first place.
Under the Affordable Care Act, we are taking steps to redesign our health care system to do just that. We are increasing access to preventive and primary care, promoting better coordinated care and care in the right settings, and reforming payment policies to drive higher quality care.
Many of these ideas come from years of meticulous research and policy development from some of the best minds in health care and academia. In fact, 20 leading economists looked at the legislation and said it contains the fundamental reform elements needed to "help transform the health care system from delivering too much care, to a system that consistently delivers higher-quality, high-value care."
For example, two-thirds of Medicare spending is for beneficiaries with five or more chronic diseases. Yet, the traditional Medicare system pays doctors for the quantity of services provided rather than for taking the time to help manage and coordinate care for their patients.
One of the first changes the Affordable Care Act makes is to provide every Medicare beneficiary with an annual wellness visit with their primary care doctor free of charge, starting in 2011. This way, doctors and patients can create a plan to prevent illness or create a treatment plan that meets all of a beneficiary's health needs.
Also starting next year, Medicare beneficiaries and many privately insured Americans will no longer have to pay cost sharing for basic preventive services. By getting patients in to see their primary care doctors sooner rather than later, we can avoid higher rates of illness or disease complications down the line.
The Affordable Care Act also promotes innovation in how we pay for care so we improve our health care delivery system. These efforts will be pioneered in the Medicare program, our nation's largest single payer for care, and some of those initiatives will start as soon as 2011.
Many smart health policy researchers and doctors across the country have ideas for how to make our health care system work better. The Affordable Care Act establishes a new Center for Medicare and Medicaid Innovation, which is tasked with identifying and testing promising new models for delivering and paying for health care. The Center will be able to look at promising models, like patient-centered medical homes that are tailored to patients' individual needs and efforts to promote more coordinated care through payment reforms.
In another effort to encourage more integrated care, the Affordable Care Act creates new incentives for physicians to join together to form "accountable care organizations." These groups allow doctors to better coordinate patient care and improve its quality, help prevent disease and illness, and reduce unnecessary hospital admissions. If accountable care organizations provide high quality care and reduce costs to the health care system, they can keep some of the money that they have helped save.
A large part of these delivery system redesign efforts is making sure that patients are receiving care in the right setting. We know nursing homes and other institutional settings aren't right for all patients. The new Community First Choice Option program will expand the availability of home- and community-based services for disabled individuals through Medicaid.
These programs are part of broader efforts in the Affordable Care Act to reform health care payments, which we believe are necessary steps to redesigning how we deliver care. The incentives in the current system are geared toward quantity rather than quality. There are an array of ways that the Affordable Care Act is moving payment from quantity to quality and value.
In 2013, a new national pilot program will encourage hospitals, doctors, and other providers to work together to improve the coordination and quality of patient care. Under payment "bundling," hospitals, doctors, and providers are paid a flat rate for an episode of care, unlike the current fragmented system where each service or test or bundles of items or services are billed separately to Medicare. For example, instead of a surgical procedure generating multiple claims from multiple providers, the entire team is compensated with a "bundled" payment that provides incentives to deliver health care services more efficiently while maintaining or improving quality of care. It aligns the incentives of those delivering care, and savings are shared between providers and the Medicare program.
We will also start creating more financial incentives for high-quality providers. A new Medicare Value-Based Purchasing program will increasingly link payments to hospitals to the quality, patient-experience, and efficiency of care that they deliver. We will expand these efforts 2015 by beginning to actually tie physician payment to the quality of care they provide.
Together, the reforms in the Affordable Care Act represent the most sweeping changes in how we measure, pay for, and encourage changes in our health care delivery system that we have seen in a very long time.
At the same time, our work is just beginning. While Medicare will be leading the charge, we are looking for ways that Medicare can work closely with other public payers and the private sector. We will be following the many innovative pilot programs to learn what work best for doctors and patients—and work to translate that across the health care system.
Our future must see a system that has the patient at the center, relies on teams of talented caregivers, provides financial rewards to those who improve care, and eliminates the inefficiencies that plague our current system. Working with the men and women and institutions across the country who are committed to this vision—in fact, many of whom created this vision—will ensure the success we need.