Not Your Father’s Medicare

When the Affordable Care Act (ACA) was passed in 2010, the most contentious provisions – which are still the subject of challenges in federal courts – were the establishment of state-wide insurance exchanges, the “individual mandate” that compels eligible citizens to buy insurance, and the expansion of state Medicaid programs. Less well appreciated, but arguably more important, were a wide range of reforms to the Medicare program. Summarized here, they touch on almost all aspects of the program, but I want to concentrate on just one.

The law directed CMS to move Medicare from a strictly fee-for-service (FFS) payment model (“paying for volume”) to one in which the quality of care was factored into the payment received by hospitals and physicians (“paying for value”). As I have written previously I believe this is the right move. There are just too many challenges to improving care and lowering costs that derive from “straight” FFS that is disconnected from any assessment of quality. And while you may not have known that they grew out of the ACA, the payment reforms themselves have gotten a lot of attention. Penalties for readmissions, requirements for physician quality reporting, pilot programs for bundled payments and accountable care organizations are just of few of the Medicare reforms. Even though they currently influence a small percentage of overall Medicare spending, these changes may already be having a big impact on how care is delivered.

With that in mind, the announcement this week that CMS is going to aggressively ramp up the use of alternative payment models is big news. These graphics were taken from one of the accompanying documents that CMS also released on Monday:

Payment Chart

MedicareChart

Together they show that Medicare is going to change profoundly – and fast. Given its dominance as the biggest payer of healthcare services in the country, this is nothing short of revolutionary.

Lots can go wrong with trying to change this much this fast, but I think this is a big bold step in the right direction. What do you think?

11 thoughts on “Not Your Father’s Medicare

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