The Obama administration hasannouncedplansto accelerate a shift in how the U.S.pays its $2.9 trillion annual health-care bill. Officials at Medicare, which covers one in six Americans, want to stop paying doctors and hospitals by the number of tests and treatments they do. Instead, the government wants to link payments to how well providerstake care of patients, not just how much care they provide. <\/p>\n
This transitionis already under way. Millions of Americans are now covered in experimental programs created by the Affordable Care Act designed to reduce unnecessary care and incentivize doctors to focus on quality, not quantity. The administration wants to vastly expand suchprograms to include half of all Medicare payments by the end of 2018. Heres what you need to know: <\/p>\n
Growth has slowed in recent years. Since 2010, per capita health spending has increased at about the same rate as the U.S. economy, a historically low rate for American health spending. Even if that holdssteady, 17 of every dollar spent in the U.S. goes to health care, far higher than inother countries that have health outcomes as good or better than Americas. <\/p>\n
After the Affordable Care Act was passed in 2010, the federal government started experiments with doctors and hospitals willing to try new payment models. One of theattempts to do this was a program called Accountable Care Organizations (ACOs), which would let medical providers share in the savings if they reduced the overall health-care costs for their Medicare patients. Now more than 7.8 million of Medicares 55 million beneficiaries get their care through such arrangements, up from zeroin 2011. <\/p>\n
The Obama administration would liketo speed this up. Medicare wants 30 percent of all payments to go through models like ACOs by the end of next year,and 50 percent by the end of 2018, up from about 20 percent now. Other incentives already in place, such as penalties for hospitals when patients get readmitted, nudgeproviders to improve care, even if theyre still getting paid in a traditional fee-for-service system. The government wants 90 percent of all Medicare payments toincludesuch incentives by the end of 2018. <\/p>\n
Its hard to say precisely how much of the total $2.9 trillion in health spending flowsthrough fee-for-service payments, but a safe answer is: most of it. Even hospitals participating in Medicares new payment experiments often get paid the old way by commercial insurers, for example. Those contradictory incentives can make it hard for hospitals to fully make the changes they need to care for patients more efficiently.Can you create a situation ultimately where youre treating fewer people in the hospital and doing fewer higher-reimbursement treatments? Thats a real risk, Moodys health-care analyst Dan Steingart told methis month.If your contracts only pay you on a pure fee-for-service basis, youre basically shooting yourself in the foot. <\/p>\n
This is the first time Medicare officials have setclear targets for how much spendingthey want to flow through new payment systems. The Obama administration saidthe goalsshould incentivize more doctors and hospitals to join, and give them some certaintythat theswitch to new payment methods is real. Thegovernment also wants private-sector buyers of health caretomake the shift. A council of executives fromthe insuranceandmedical industries, as well as big employers such as Boeing and Verizon, will try to expand alternative payments. <\/p>\n
Medicare is trying a fewexperiments, including ACOs and bundled payments (which try to put limits around how much hospitals can charge forcommon procedures like knee and hip replacements). While economists and medical providers largely agree that ending the fee-for-service program is essential to containing health-care costs, the evidence for the new models isnt really in yet.Medicare officials saidthey have no results on bundled payments yet. The early years of the ACO program have shown some savings, but a majority of ACOs for which Medicare has datahave not generated savings yet. <\/p>\n
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How Obamas $3 Trillion Health-Care Overhaul Works<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The Obama administration hasannouncedplansto accelerate a shift in how the U.S.pays its $2.9 trillion annual health-care bill. Officials at Medicare, which covers one in six Americans, want to stop paying doctors and hospitals by the number of tests and treatments they do. Continue reading