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How Medicare Reimbursement Changes Affect Healthcare Providers

What does the shift from volume to value in Medicare payments actually mean?

Jan Gnida, Director, Patient Experience and Government Surveys 

Monday’s announcement that the U.S. Health and Human Services Department (HHS) is changing the way it is reimbursing Medicare providers probably flew comfortably under the radar of most Americans. But, as soon as HHS Secretary Sylvia Mathews Burwell posted the news on HHS.gov, the healthcare community started evaluating its potential impact.

The shift means that the federal government soon will begin channeling a higher percentage of traditional Medicare dollars to “alternative payment models” that pay providers for outcomes rather than for each of the individual services they provide. Transitioning away from the fee-for-service model will require providers to focus less on volume and more on quality and value.

  • By 2016—next year—HHS aims to tie 85 percent of all traditional Medicare payments to quality or value, with the target increasing to 90 percent by 2017.
  • Also by next year, Secretary Burwell said that HHS wants 30 percent of all Medicare provider payments to go to alternative payment models such as Accountable Care Organizations and Patient Centered Medical Homes that, in her words, “put patients first.” HHS hopes that 50 percent of traditional Medicare payments go to alternative payment models in 2017.

Cutting through the clutter, what we should hear is that quality and accountability count—and that future success will hinge on responsive healthcare providers who make and keep patients healthy by coordinating care, adding value and enhancing the patient experience. Providers who focus on achieving excellence will be ahead of the curve and positioned to adapt to change.

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