Health and Human Services announce changes to how Medicare makes payments

The Obama administration on Monday announced an ambitious goal to overhaul the way doctors and hospitals are paid in a bid to overhaul the nation's $3-trillion health care system.

The announcement by Health and Human Services Secretary Sylvia Burwell aims to spearhead efforts to replace Medicare's traditional fee-for-service medicine, in which doctors, hospitals and other medical providers are paid for each case or service without regard to how the patient fares.

"Today's announcement is about improving the quality of care we receive when we are sick, while at the same time spending our health care dollars more wisely," said HHS Secretary Sylvia Mathews Burwell. "We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement."

The new HHS payment goals are "ambitious, but realistic," said Josh Seidman, vice president at Avalere Health, a D.C. healthcare consulting firm.

"It is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people," said Burwell.

According to the statement, the Health and Human Services said rather than paying more to Medicare doctors and hospitals for every procedure they perform, the government will assess whether patients are healthier, among other measures.

The major goal of the administration is to handle half of all Medicare payments in this way by 2018.

The new goals were broadly hailed by consumer advocates, leading medical providers and insurance industry officials.

"Today's announcement will be remembered as a pivotal and transformative moment in making our healthcare system more patient- and family-centered," said Debra L. Ness, president of the National Partnership for Women & Families, a leading consumer advocacy group.