Is the US government changing the Medicare model?
A plan was recently revealed by the Obama Administration to control the increased cost of health by moving away $2.9 trillion health systems from being fee-for-service. The Health and Human Services secretary informed reporters that by 2018, 50% of the $362 billion annual payments of Medicare would be handed over to hospitals, doctors as well as other providers who participate in the alternative payment model which puts an emphasis on the containment of cost and the provision of quality care.
Officials who wish to see this initiative matched by employers, the state Medicaid programs meant for the low income groups as well as by private insurers said that such a move being taken has been done so with the intention of heading off a rebirth in the increase in healthcare costs from a low of 3.6% experienced in 2013 to 6.6% which is projected in 2020.
This announcement was made after the Secretary had met with stakeholders within the public as well as private sector which included provider and consumer groups as well as insurers and employers which comprised of Verizon Communications Inc. and Boeing Co.
According to an analysis provided by Wall Street, private insurers as well as for-profit hospitals were likely to benefit from such a shift towards low cost care delivery as they are better positioned for it. Those groups who represent hospitals and doctors stated that the move taken could definitely result in their members experiencing great flexibility in terms of determining the kind of care delivery while representatives of the consumers said that such unprecedented goals could allow quality of care to rise.
At present, 20% of the usual Medicare payments which amounts to around $72 billion go to those providers who make use of the cost-saving business models. The remaining is provided in terms of the fee-for-service payment model which rewards providers on the basis of the volume of care that they provide. Policymakers believe this model is seen to be leading to higher costs, care which is low in quality as well as procedures which are not needed. The aim of the administration is to increase the numbers participating in the alternative care models to 30% by the end of 2016.
According to officials, the 50% goal which has been set for 2018 is seen as a tipping point which can help in making the payment reform one which is mainstream and found throughout the health system in the US. In 4 years, the administration is hopeful that 10% of traditional Medicare would be linked to higher quality and efficiency and would include the remaining providers following the fee-for-service model.
Experiments have also been conducted by the government with payment models which have been stated to generate around $417 million in terms of savings for Medicare. However this effort could face odds in its favor. Such newer models have been shown to have limited amounts of progress in being able to control the costs incurred and not much evidence is present which shows their ability for cost savings sustainability.