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Medicare Payment Reform

The new Medicare goal for payment reform is a significant milestone toward improving patient care and making health care spending more sustainable, write the authors.

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idea light bulbThe Affordable Care Act, or ACA, included a variety of reforms intended to lay the groundwork for a fundamental shift in how our nation pays for health care, with the goal of rewarding quality, improving outcomes, and containing the growth in costs. Traditionally, as is the case today, most health care payments are made on a fee-for-service basis, which incentivizes overuse, promotes waste and inefficiency, and pays little attention to accountability for quality of care. The ACA offered the opportunity to test alternative payment models that pay health providers based on the value of care rather than volume.

The models implemented under the ACA incentivize health providers to improve patient outcomes and reduce costs through a variety of approaches, including shared savings, financial risk, and enhanced payments for care coordination and service integration. Patient-centered medical homes, bundled payments, and accountable care organizations are key examples of these new models. Combined with requiring providers to reduce hospital readmissions and incentivizing meaningful use of health information technology, or IT, these alternative models are showing promise to meet the goals of improved quality and reduced cost.

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