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HHS Sets Goals for Medicare’s Alternative Payment Models

After meeting with key healthcare industry officials in Washington earlier in the year, Health and Human Services (HHS) has identified specific goals and established concrete deadlines for overhauling the Medicare payment system, which has traditionally operated under the standard fee-for-service model.

The Obama administration is committed to securing 30% of payments for traditional Medicare benefits from alternative payment models, such as Accountable Care Organizations (ACOs), by the end of 2016 and 50% of those payments by the end of 2018. Since the existing ACO program began in 2011, HHS credits it with an estimated $417 million reduction in Medicare spending.

“We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement,” HHS Secretary Sylvia Mathews Burwell said in a statement announcing the targets.

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