Increasing Transparency in Health Care with Open Payments

By Ted Doolittle, Deputy Director, CMS Center for Program Integrity
At the Centers for Medicare & Medicaid Services, we are committed to transparency. Thanks to the Affordable Care Act, we have powerful new tools to advance transparency in health care and provide consumers with the information necessary to make informed choices. I’m pleased to share today the latest steps we are taking to bring accountability to health care under our national Open Payments program (commonly known as the Physician Payments Sunshine Act).
This program is designed to increase public awareness of financial relationships between drug and device manufacturers, group purchasing organizations (GPOs) and certain health care providers. Patients should know when their doctors have a financial relationship with health care facilities and companies that make or supply medicines or medical devices they may need. Disclosing these relationships allows patients to have more informed discussions with their doctors about the care they receive.
On February 18, some of these organizations will begin to submit data to CMS on payments made to health care providers, including gifts, consulting fees and research activities. This date marks the first of two phases of data submission implementation under the Open Payments program. Later, in May of this year, manufacturers will complete the second phase by submitting additional, detailed payment information. We believe that this approach helps to ensure the accuracy of the data collected, and provides the time organizations need to make their submissions, particularly those with large data files.
Once CMS completes the two phases of data submission, health care providers and manufacturers will have an opportunity to review and correct inaccuracies. CMS will then post the data on our website by September 30. We are also collecting and posting information on physician ownership or investment interests in manufacturers and group purchasing organizations.
Through the Open Payments program, the combined efforts of CMS, participating health care providers and other stakeholders are building on current efforts to improve health care quality by increasing transparency and accountability in our health care system.

Medicare’s delivery system reform initiatives achieve significant savings and quality improvements – off to a strong start

The Affordable Care Act is providing millions of Americans with access to quality, affordable health coverage—many for the very first time. But fixing America’s health care system means making health care affordable and high quality, as well as accessible.

Results we’ve released today show the progress we’ve made on slowing the rise in health care spending—bending the cost curve—while improving health care quality.

One of the key reforms in the Affordable Care Act is creating Accountable Care Organizations (ACOs). ACOs, are groups of doctors, hospitals, and other health care providers that have agreed to work together to give their Medicare patients better coordinated, high quality care. To the extent that they succeed in providing more effective and efficient care, they can share in the savings to the Medicare program. Interim financial results for 114 ACOs that began work in 2012 show that they generated $128 million in savings for the Medicare trust fund in the first year —while maintaining high quality patient care.

Additionally, initial results from an independent evaluation of 23 Pioneer ACOs, which are those that have more experience with coordinated care, show that they saved the Medicare program $147 million in their first year of operation.

ACOs are helping to improve the quality of health care and, in doing so, lowering costs for taxpayers and patients. While still early in the program, with some ACOs making greater progress than others, the $275 million in savings—and the high quality of care that has accompanied it—are admirable results. ACOs are designed to achieve savings over several years, not always on an annual basis, but this is a very strong start. Moreover, through regular webinars; tools for sharing information and best practices; opportunities for ACOs to connect with one another; and other activities, we’re providing ACOs the infrastructure and resources to learn from one another and to then diffuse what’s working and what’s not.

Delivery system reform takes time, but ACO’s are committed to the program. Dr. Kenneth W. Wilkins, President of Coastal Carolina Health Care said that “Our experience has shown that ACOs can increase quality while lowering costs. As a result of the programs we’ve initiated, our patients have experienced better access to their primary care physician, higher quality measures, and fewer trips to the hospital. We look forward to making continued progress and seeing future results.”

Additionally, as part of the largest and most ambitious test ever of a bundled payment model in Medicare, or any other payer in the U.S., 232 provider groups, hospitals and others have agreed to participate in the Medicare Bundled Payments for Care Improvement initiative. Bundling payment for services that patients receive across a single episode of care, such as heart bypass surgery or a hip replacement—instead of making payments to providers for every single service—rewards the quality of care instead of the quantity of services, and encourages better care coordination.

Congress is also working on a bipartisan and bicameral basis to pass long-term legislation to reform Medicare’s current physician payment system and replace the Sustainable Growth Rate formula with a system that will reward value over volume—and enable more physicians to participate in new models of care that will reward improvements in patient care and total cost reduction. The results we’ve announced today provide strong evidence that these legislative proposals are the right direction for the Medicare program and our nation’s healthcare delivery system.

CMS Modifies Policy on Disclosure of Physician Payment Information

By: Jonathan Blum, Principal Deputy Administrator

Today the Centers for Medicare & Medicaid Services (CMS) took a step forward in making Medicare data more transparent and accessible, while maintaining the privacy of beneficiaries.  Today’s Federal Register notice modifies the administration’s policy on disclosure of physician payment information.  Going forward, CMS will evaluate requests for individual physician payment information (or requests for information that combined with other publicly available information could be used to determine total Medicare payments to a physician) on a case-by-case basis.  The new policy released today will take effect 60 days after publication in the Federal Register. In addition, CMS will generate and make available aggregate data sets regarding Medicare physician services for public consumption.

In making the decision to replace the prior policy, the agency considered the more than 130 comments representing the views of over 300 organizations and individuals we received (  Numerous of these comments identified ample benefits to releasing Medicare physician payment data, including use of the data by:

  • Providers to collaborate on improved care management and the delivery of healthcare at lower costs;
  • Consumers to gain broader, more reliable measures of provider quality and performance which drives innovation and competition while informing consumer choice; and
  • Journalists and others to identify waste, fraud, and abuse as well as unsafe practices.

The decision to modify the policy also takes into account HHS’ strong commitment to greater data transparency over the past several years.  In 2010, HHS launched the Health Data Initiative to promote transparent, innovative, and safe data use.  As part of this effort, CMS has engaged with a wide range of public, non-profit, and private sector stakeholders to foster the availability and use of health care data to drive innovations that improve health and health care. 

Given the advantages of releasing information on Medicare payment to physicians and the agency’s commitment to data transparency, we believe replacing the prior policy with a new policy in which CMS will make case-by-case determinations is the best next step for the agency.  However, CMS also recognizes the valid concerns raised by many stakeholders over protecting the integrity of the data.  As CMS makes a determination about how and when to disclose any information on a physician’s Medicare payment, we intend to consider the importance of protecting physicians’ privacy and ensuring the accuracy of any data released as well as appropriate protections to limit potential misuse of the information.  And as always, we are committed to protecting the privacy of Medicare beneficiaries.

This policy change follows other CMS efforts to make more data available to the public.  Since 2010, the agency has released an unprecedented amount of aggregated data in machine-readable form, with much of it available at  These data range from previously unpublished statistics on Medicare spending, utilization, and quality at the state, hospital referral region, and county level, to detailed information on the quality performance of hospitals, nursing homes, and other providers. 

In May 2013, CMS released information on the average charges for the 100 most common inpatient services at more than 3,000 hospitals nationwide

In June 2013, CMS released average charges for 30 selected outpatient procedures

Combating fraud and abuse in the Medicare Prescription Drug Program

By Jonathan Blum, CMS Principal Deputy Administrator

The Centers for Medicare & Medicaid Services (CMS) takes prescription drug abuse very seriously and actively works to detect and prevent fraud and abuse in order to protect the Medicare program, its beneficiaries, and taxpayers.

The Medicare Part D prescription drug benefit provides prescription drug coverage to more than 39 million seniors. CMS strives to ensure that beneficiaries have the medications they need while at the same time is being vigilant to safeguard the program from inappropriate use. 

A centerpiece of our strategy to combat fraud and abuse in Medicare Part D is the identification of Part D enrollees who have potential opioid or acetaminophen overutilization issues that may present a threat to patient safety. Overutilization of opioids or acetaminophen products can result in serious adverse events or death. The Medicare Part D Overutilization Monitoring System was implemented in 2013 to help CMS ensure that Part D plan sponsors are meeting CMS requirements to establish reasonable and appropriate drug utilization management programs to prevent overutilization of these medications.  Comparing recent data with 2011 Part D data that pre-dates the implementation of the monitoring system shows that there has been a substantial reduction in the number of opioid and acetaminophen overutilizers in Medicare Part D.  In 2011, more than 172,000 Part D enrollees were identified as meeting CMS criteria for potential opioid or acetaminophen overutilization.  Between January and June 2013, the number of Part D enrollees with potential opioid or acetaminophen issues dropped to approximately 35,600 – a rate that would represent a reduction of nearly 60 percent if maintained throughout 2013.  

CMS also released a proposed rule today that seeks to employ new tools when problematic prescribers and pharmacies are identified. Some of the proposed key fraud and abuse provisions include:

  • ·       Requiring prescribers of Part D drugs to enroll in Medicare and revocation such enrollment in cases of abusive prescribing practices and patterns;
  • ·       Allowing CMS to request and collect information directly from pharmacy benefit managers, pharmacies and other entities that contract with Part D sponsors to better detect fraud; and
  • ·       Improving CMS’ ability to collect identified Medicare overpayments from MA plans and Part D sponsors.

Combined with our ongoing efforts, the fraud and abuse provisions in the proposed rule will ensure that Medicare beneficiaries have access to affordable prescription drugs while making certain that plans provide value to Medicare and taxpayers.

For more information about our efforts to combat fraud, waste and abuse in Medicare Part D, please visit:

To read the proposed rule, please see: The proposed rule will be published in the Federal Register on January 10, 2014.  CMS will accept comments on the proposed rule until March 7, 2014. 

New Data Shows Affordable Care Act Reforms Are Leading to Lower Hospital Readmission Rates for Medicare Beneficiaries

Being re-hospitalized shortly after being discharged is an unpleasant experience for patients. It’s also costly for patients, insurance companies and other payers, and—if the patient is a Medicare beneficiary—taxpayers, too. High readmission rates – the percentage of inpatient discharges where a re-hospitalization occurred – can also be a sign of low-quality care. It often means there may have been unclear instructions to patients or lack of follow-up care.

While many people only understand the Affordable Care Act as a plan to expand health insurance, it includes many provisions to slow the growth in health costs. Why does this matter? The consistent increase in health care costs over the past several decades puts a strain on the national pocketbook and that of millions of families who faced rapidly increasing premiums.

And we’re seeing results. Health care price inflation is now at its lowest level in 50 years, and, according to the most recent projections, health care spending grew at the slowest rate on record over the last three years. Real per person spending grew at just a 1.3 percent rate, and this slow growth was seen in Medicare, Medicaid and private insurance. Inflation for health care goods and services is currently running at just 1 percent on a year-over-year basis.

As just one of the many reforms to slow health care costs and improve patient quality, over the past several years the Centers for Medicare & Medicaid Services (CMS) and others have focused on reducing avoidable readmissions, including hospital-level improvement initiatives, community-based care transitions programs, and broad-based payment incentives like the Hospital Readmissions Reduction Program.

The all-cause 30-day hospital readmission rate among Medicare fee-for-service beneficiaries held constant from 2007 to 2011. Earlier this year, a group of researchers at CMS published a study revealing good news about hospital readmissions: In 2012, when the Affordable Care Act’s reforms focused on reducing avoidable readmissions kicked in, this rate began to fall. After holding steady at 19 percent from 2007 to 2011 the all-cause 30-day hospital readmission rate among Medicare fee-for-service beneficiaries fell to 18.5 percent in 2012.

We are pleased to report that the decline in readmission rates is continuing into 2013. Preliminary claims data shows the Medicare readmission rate averaged less than 18 percent over the first eight months of 2013. This translates into an estimated 130,000 fewer hospital readmissions between January 2012 and August 2013.

Line chart. Shows annual readmission rates holding steady at 19 percent from 2007-2011, then declining to 18.5 percent in 2012 and 18 percent for the first 8 months of 2013.

Source: Office of Information Products and Data Analytics, CMS

In addition, this trend is widespread across the country. To see how rates are changing at the local level, we compared readmission rates over the first eight months of 2013 to the average rates for 2007-2011 in local health care markets. We found that this year’s readmission rates were at least a half a percentage point lower in 76 percent of local markets (232 of the 306). Fewer than 10 percent of local markets had higher rates. Using the same comparison, readmission rates also went down in 49 states and the District of Columbia. The only state that did not see a decrease – Utah – already had one of the lowest readmission rates in the country.

Percentage Point Change in Medicare Readmission Rates by HRR,
January-August 2013 to 2007-2011 Average

Map of the United States.  Shows readmission rates declined in the vast majority of HRRs and improvement was widespread throughout the country.  Rates increased in a small number of HRRs with increases not focused in particular areas of the country.

Source: Office of Information Products and Data Analytics, CMS

We can see that the decline in all-cause readmission rates that began in 2012 is continuing this year on a widespread basis. While we continue to monitor and study these encouraging reductions, what is clear is that intense focus on reducing hospital re-admissions through improved processes of care and new tools in the Affordable Care Act are having a demonstrably positive impact.

CMS Releases Latest Value-Based Purchasing Program Scorecard

By Dr. Patrick Conway, CMS Chief Medical Officer and Director of the Centers for Clinical Standards and Quality

On November 14, for the second year in a row, the Centers for Medicare & Medicaid Services (CMS) posted Hospital Value-Based Purchasing payment incentive adjustment factors for fiscal year 2014. We think this second anniversary deserves recognition—it’s a sign that value-based purchasing in Medicare is becoming routine.

The Affordable Care Act gave CMS many new tools to convert Medicare from a program that paid for decades on automatic pilot into one that deliberately pays to promote better health. Now, thanks to one of these tools, the Hospital Value-Based Purchasing program, Medicare is no longer a program that just pays the bills. Acute-care hospitals across the country not only are paid more for higher quality care, they also have skin in the game.

In FY 2014, 1.25 percent of a hospital’s Medicare base-operating DRG payments go into a value-based purchasing pool. Depending on how well hospitals measured up to their peers on important health-care quality indicators during a prior performance period, they will either break even, get a bonus, or—if their performance is lower than average—get back less than what they contributed to the FY 2014 pool.

FY 2014 payments began October 1. About half of the hospitals participating in the program —over 1300 hospitals—will essentially break even over the course of the year, that is, their payment change is between -0.2 percent and +0.2 percent. Across the country, 630 hospitals—just under a quarter—will receive a bonus, that is, an increase in Medicare payment above +0.2 percent. Just over a quarter of hospitals (778) will receive an overall decrease in Medicare payment, which means that it is less than -0.2 percent.

But even though we’d like to see every hospital across the country offer the highest quality care possible, we’re pleased with this round of results. Hospital Value-Based Purchasing provides a useful snapshot of how hospitals are performing on important indicators for patient safety, care, quality, and well-being. The Hospital Value-Based Purchasing program refines the measures it uses to evaluate performance annually.
In FY 2014, there were fewer higher performers—that is, their incentive payment is greater than the amount they contributed—than lower performers—their incentive payment is lower than the amount they contributed, that higher performers’ bonuses on average will be larger than the lower performers’ losses over the course of the year.

Finally, a little over two-thirds of the higher performers were higher performers last year, and about three-quarters of the lower performers also had an incentive adjustment factor of less than one in FY 2013. That’s good news too. The fact that not every higher performing hospital last year made the grade this year, and not every lower performing hospital last year will see payment decline this year,, means that hospitals are adjusting to the new world of value-based payment. It also may mean that the important addition of 30-day mortality measures for heart attack, heart failure and pneumonia had an impact on hospitals’ scores.

As the Hospital Value-Based Purchasing program continues to evolve with a richer set of measures including an efficiency measure in FY 2015, we may see the mix of value-based payment adjustment factors change again. Meanwhile, value-based purchasing in Medicare continues to move ahead, improving the way that health care is delivered to people with Medicare now and helping create a health care system that will ensure quality care for generations to come.

To see the November 14, 2013 value-based incentive payment adjustment factors, please go to:

Virtual Research Data Center Offers Secure Timely Access to Data at Lower Cost

By Niall Brennan, Acting Director, Offices of Enterprise Management

One of the Obama administration’s top priorities is to make healthcare affordable through better quality and more efficient delivery.  But a thoughtful approach to health system transformation requires the country’s best minds working on it, using the most comprehensive, up-to-date evidence available.

On November 12, the Obama administration took an important step forward on this path.  At the White House’s Data to Knowledge to Action event, Building New Partnerships, the Centers for Medicare & Medicaid Services (CMS) announced the new Virtual Research Data Center (VRDC), which can provide the nation’s researchers with access to the most comprehensive, up-to-date data sets available through CMS.

CMS covers 100 million Americans through Medicare, Medicaid, the Children’s Health Insurance Program, and soon through the Health Insurance Marketplace. The Medicare program is the nation’s largest health insurer, handling more than 1 billion claims per year.  We have made our data sets available to researchers for many years.  Studies that help us better understand the healthcare ecosystem are published almost weekly in major medical journals based on CMS data.

Demand for CMS data has grown exponentially in recent years.  Historically, the scale of CMS data and a lack of technological alternatives meant most researchers were physically shipped data, with yearly updates as permitted. Medicare data for 2012 is only just now being physically shipped to researchers. Through the VRDC, we are changing that. The VRDC will help investigators access data in a much timelier manner and will provide them with a variety of tools to analyze the data.  It will also help approved researchers doing approved surveillance and other studies that require current data, which needs to be refreshed on a regular basis, something that has traditionally been unavailable.

We also want CMS data to be affordable, and the VRDC helps with this, too. The lowest price of a complete set of Medicare Parts A, B, and D data was more than $100,000 for a single year, and many researchers need multiple years of data.  Now, with the VRDC, a single researcher conducting one project over the course of the year can have access to as much data as his or her research requires for $40,000.  User fees reflect the cost of making the data available and are used to fund CMS data dissemination to researchers.  Additional users can be added to a project for $15,000. We believe this helps lower any price-based barriers to obtaining Medicare data.

Finally, the VRDC will make data sharing more secure.  In the VRDC, sensitive, individually-identifiable information about beneficiaries never leaves the CMS data environment.  This can help prevent breaches or unauthorized data use.  In addition, since researchers will be accessing CMS data through a secure virtual desktop, they no longer need to maintain expensive data infrastructures of their own or prove to CMS through data security assessments that their data infrastructure meets the security requirements in the CMS Data Use Agreement.   However, I also want to assure established CMS data users who have invested significant sums in an existing data storage infrastructure:  you can still get your data physically as you always have. CMS data has the potential to help create a more efficient, higher-quality healthcare system. Our goal is to break down barriers to information and encourage innovation in health care delivery.  Even under the old system, CMS data has provided the basis for breakthroughs in healthcare reform.  We look forward to using the VRDC to stimulate innovations that are equally groundbreaking in years to come.

For more information or to submit a VRDC research request, visit the ResDAC VRDC webpage:


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