New Medicare Payment Model Drives Better Patient Outcomes

Posted on: March 2, 2015

The Department of Health and Human Services (HMS) recently announced a decision to shift Medicare payments from service-based metrics to performance-based metrics, which means that in some cases, doctors will receive Medicare payments based on patient outcomes rather than the services they provide to patients.

Under the current fee-for-service model, doctors and hospitals receive payment regardless of whether the treatment and care provided to patients is effective. Under the new model, fees will be determined based on how well the patient fares. This is the first time the government has ever set goals to move away from fee-for-service payments and it is a positive effort to spend health care dollars more effectively and improve the quality of our health care system to produce better patient outcomes.

According to HHS, Medicare will aim to tie 85 percent of all traditional payments to quality by 2016 and 90 percent by 2018.

While the fee-for-service payment structure may have encouraged providers to offer excess care, there’s no guarantee that the new outcomes driven system will succeed in cutting Medicare costs and increasing quality of care for patients. Although HHS has piloted other alternative payment methods, including a variety of Accountable Care Organizations (ACO’s) and Bundled Payments, with some measure of success.

These initiatives, along with others like the Medicare Payment Advisory Commission’s (MedPac) recent site-neutral reimbursement recommendation, are all aimed at providing higher quality patient care while reducing health care spending.

These proposals also offer a much-needed place in the health care system for patients and family members to make decisions along with their medical team. For example, under the ACO model, medical teams who care for Medicare patients must work together with each other and the patient to coordinate care and the payment they receive is tied to the quality of care provided. Site-neutral reimbursement enables patients and their physicians to choose between recovering at a Skilled Nursing Facility or an Inpatient Rehabilitation Facility.

While they are all certainly steps in the right direction, the effectiveness of these programs remains to be seen.