policy

Payment and Delivery Reform

ISSUE

Beginning in the Bush Administration and given a boost by the ACA and MACRA during the Obama Administration, Medicare has embarked on an effort to move away from the fragmented, inefficient legacy fee-for-service (FFS) model for paying for health care toward alternative payment models (APMs) in the long-term and toward pay-for-performance within the FFS system as providers transition toward APMs.

On a parallel track, growth in the Medicare Advantage program, projected to cover 22.6 million people in 2019, representing 36.7% of Medicare beneficiaries, and policy changes to increase its flexibility for innovation, is also a positive step toward transforming Medicare because of the global budgets, though they are tied to FFS rates in the local area.

POSITION

We strongly support and encourage Medicare to:

  • Continue the work of the Center for Medicare and Medicaid Innovation (CMMI) and encourage wider adoption of prove innovations in both Medicare and Medicaid.
  • Promote Medicare Advantage innovations, including the recent ability to provide non-health services for beneficiaries to stay in their communities and reduce hospital admissions.
  • Focus on scaling up proven, successful models rather than a proliferation of models. Encourage total cost of care models, comprehensive primary care plus, the diabetes intervention model, and the pioneer and advanced ACO models, which have demonstrated success and hold promise.
  • More generally, we strongly believe that models focused on global budgets, managing the total cost of care, managing population health, and keeping people well as well as effectively treating them will be successful in improving outcomes and reducing the overall cost of care.

WHY IT MATTERS

  • The Medicare Part A Trust Fund, that pays for hospital care, will begin depleting its reserves in 2026. It is imperative that Medicare get its fiscal house in order.
  • Spending on health care is reaching almost 20% of GDP and is crowding out expenditures for other important priorities including infrastructure and education. It is also encompassing an ever-larger part of the budget in the absence of major improvements in the effectiveness and efficiency of care.
  • We can’t fix health care without fixing Medicare. As the largest payer for health care in the US, Medicare must lead the way and partner with the private sector to drive delivery transformation.
  • Employers and employees risk higher Medicare payroll taxes in the absence of improvement in Medicare’s fiscal picture.

Also of Interest

ACOs and Payment Reform
Access all Public Policy resources on ACOs and payment reform.

2020 Election Health Policy Priorities
Access all Public Policy priorities leading up to the 2020 election.

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