affordable care actA chief goal of the Affordable Care Act is to improve the quality of healthcare in the U.S. One strategy for achieving this is to pay healthcare providers based on performance rather than the traditional “fee for service” model.

What does this mean for Medicare providers?

Hospitals and other healthcare providers must regularly report quality metrics in areas such as readmissions, hospital-acquired infections, etc. to the federal government. Using these reports, the Centers for Medicare and Medicaid Services (CMS) determines whether the provider is performing well against certain benchmarks, with value-based payments and penalties for hospitals and certain physicians. Over the course of the next two to four years, skilled nursing facilities, hospices, home health agencies will also have to participate in value-based reimbursement programs.


What’s the impact to seniors?

Because providers need technology to track and report these metrics and technology costs money, some believe that this requirement could force some of these providers to stop accepting Medicare patients and others to go out of business entirely down the road.

Providers also need to keep tabs on—and positively impact—their patients’ health. The result is “a wholesale consolidation of the healthcare industry,” says Rebecca Gwilt, principal with Redbird Law and Consulting, providing legal and consulting services to healthcare providers, “with hospitals purchasing skilled nursing facilities, community clinics, etc., so they can track and control care in the larger community.” Otherwise, the hospital is only able to influence patients’ health while they’re on their premises.

In the future, this consolidation could result in seniors having fewer choices of health care providers.


The bottom line

While “pay for performance” will be challenging for providers and perhaps limiting for patients, the net result promises to be better care for seniors.

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