Making Medicare Payments More Efficient

If Medicare is going to achieve its goal of moving away from fee-for-service payments, it must focus greater attention on bundled payment models which continuing to improve its accountable care organization programs.

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idea_bulbThe health care system—including the Medicare program—is slowly adopting new payment models that change these incentives and encourage higher-quality, more coordinated care. The Department of Health and Human Services, or HHS, recently set a timeline to accelerate Medicare’s move away from FFS payments. HHS’ goal is for 50 percent of its Medicare payments to be made through alternative payment models by 2018, with an interim goal of 30 percent by 2016.

Medicare’s payment reform efforts have largely focused on two models: accountable care organizations and bundled payments. Accountable care organizations, or ACOs, are groups of health care providers that share responsibility for providing lower-cost, higher-quality care for a group of patients. Bundled payments are fixed amounts paid by payers—including Medicare, Medicaid, states, and private health care plans—to health care providers for all of the care a patient is expected to need during a defined period of time or for a set of services needed to treat a particular injury or illness.

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