The federal government plans to significantly change the way it reimburses Medicare providers in coming years, moving to pay less based on the volume of specific services given to patients, and more for the quality of care those people receive under that massive government-run health coverage program.
The Obama administration revealed details of that big shift from the current traditional Medicare payment structure to a more outcome-based model in an announcement Monday.
The U.S. Health and Human Services Department said it was increasing the percentage of traditional Medicare dollars currently paid out to "alternative payment models" that emphasize patient outcomes over getting paid for individual medical services, and also moving to have even more of all traditional Medicare payments tied to value instead of services.
"This is the first time in in the history of the Medicare programs that HHS has set explicit goals for alternative payment models and value-based payments," the department said in a press release detailing the changes.
Medicare is the second-largest U.S. budget item, and accounts for nearly $600 billion of spending. About 70 percent of the 54 million Medicare beneficiaries are on traditional Medicare, where the government directly pays hospitals and doctors for caring for the covered people. The Medicare Advantage program, under which the government pays insurers to coordinate payments for beneficiaries, accounts for the balance of covered people.
Most Medicare beneficiaries are people age 65 and older. Nine million of the program's beneficiaries are people younger than 65 with disabilities.