The Facts

On April 29, 2009, the Senate Finance Committee released the first of three anticipated health reform option papers. The proposals under consideration would make significant Medicare payment changes, several of which are described below.

Payments Linked to Quality

Value-based purchasing would result in Medicare paying hospitals, home health agencies and skilled nursing facilities based on their actual performance against quality measures, rather than being paid for providing services and reporting on quality measures and activities, as they are now.

Payments Linked to Care Coordination

Accountable care organizations (ACOs) would be established as a vehicle for groups of providers to voluntarily meet quality thresholds and share in cost savings achieved for the Medicare program. ACOs would be formal legal structures formed by groups of providers that meet certain criteria, such as including the primary care providers of at least 5,000 Medicare beneficiaries, a core group of physician specialists, and processes to promote evidence-based medicine.

Payments to Encourage Primary Care and Surgical Services in Scarcity Areas

Bonus payments for primary care physicians and general surgeons of up to 5 percent of fee schedule amounts would be provided to physicians who furnish at least 60 percent of their services in specified ambulatory settings or practice in rural scarcity areas.

What’s at Stake

  • Providers will face increasing demands to shift the paradigm of patient care from a model based on fee-for-service payments to one oriented to quality measurements and care coordination.
  • Providers will be competing on the basis of quality and may experience changes in reimbursement individually, but the total pool of funds will not generally increase for many of the proposed reforms.

What You Should Do

  • Consider submission of comments to the Committee. Comments can be submitted through May 15, 2009.
  • Examine current approaches to patient care and consider internal and external steps necessary to manage the impending shift from traditional fee-for-service payments to payments based on quality measurements and care coordination.
  • Explore relationships with management companies or better performing partners who can improve overall quality.
  • Consider new relationships with physicians to invest doctors in quality outcomes.
  • Continually evaluate ongoing business decisions in light of the direction and quick pace health reform is taking.

Click here to view the entire policy paper.