3 factors that will transform Medicare

Although Medicare was built on a failing model of fee-for-service, the nation's largest insurer has been making plans to transform itself into the future, say two health policy experts.

Medicare has been facing an "unsustainable financial path" because its fee-for-service payment method "contributed greatly to higher spending without improving health outcomes," Douglas Holtz-Eakin, president of the American Action Forum, and Kenneth Thorpe, professor and chairman of the Department of Health Policy and Management at Emory University, write in an opinion piece for The Hill

But Medicare has begun to better position itself for the future. "While only time will tell, this year's achievements in reform make us much more optimistic about Medicare's future," they write.

Holtz-Eakin and Thorpe say there are three factors that will transform Medicare. They are:

1. The Department of Health and Human Services announced it would shift Medicare's model from fee-for-service to value-based payments. Medicare will transition to paying for improved health outcomes starting in 2016, when HHS hopes that 30 percent of payments will be tied to quality or value. HHS plans for 50 percent of Medicare's provider reimbursements to be value-based by 2018.

2. The Centers for Medicare & Medicaid Services announced that it would pay physicians to coordinate care for Medicare beneficiaries with chronic conditions. That's an important shift because 63 percent of Medicare members have at least three chronic conditions, including diabetes, heart disease and breast cancer. And care for chronic diseases makes up 95 percent of Medicare's overall spending. "CMS' new payments for care coordination align program spending with the kind of care millions of beneficiaries need, while also addressing the leading cost driver in the program," Holtz-Eakin and Thorpe write. 

3. Medicare revamped how it pays providers who perform hip and knee replacement surgeries based on their ability to deliver high-quality, low-cost care. Holtz-Eakin and Thorpe call this decision "one of the most promising developments," likely because of the huge variation in medical costs. For instance, the price for knee and hip replacements--which are the two fastest-growing medical treatments in the country--differ by more than $20,000 from one place to another.

To learn more:
- read The Hill article

 

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