Current & Emerging Payment Models

Health care is currently in the middle of a transition from a system of payment based on the volume of services provided (fee-for-service) to payment based on the value of those services (value-based care and alternative payment models).

The Center for Medicare & Medicaid Services has set a goal of increasingly tying Medicare payment to value. For example, CMS estimated that, as of January 1, 2016, nearly a third of Medicare payments were attributed to alternative payment models. Thus, for now, hospitals and health systems must exist in both the fee-for-service and value-based worlds. Specifically, they need to continue to serve and operate under the traditional, siloed payment systems, such as Medicare's inpatient and outpatient prospective payment systems.

However, they also must begin to determine how they will take financial accountability for the quality and costs of an entire episode of care or attributed population, such as under the Comprehensive Care for Joint Replacement bundled payment or Accountable Care Organization programs.

Medicare

Medicare coverage is tied to eligibility for Social Security or Railroad Retirement benefits. In 2015, there were almost 56 million people enrolled nationwide. The program includes: Hospital Insurance - Also known as "Part A," Medicare hospital insurance helps cover inpatient care in ...

Inpatient Prospective Payment System (IPPS)

What Is the Inpatient Prospective Payment System (IPPS)? One in every five Medicare beneficiaries is hospitalized one or more times each year. Of the approximately $300 billion dollars spent on the Medicare program each year, almost $100 billion is spent on inpatient services. More...

Outpatient PPS

The Centers for Medicare & Medicaid Services (CMS) July 13 released its calendar year (CY) 2024 outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) proposed rule that would increase OPPS rates by a net 2.8% in CY 2024 compared to CY 2023. The rule al...

MACRA & Other Physician Payment

The Centers for Medicare and Medicaid Services (CMS) uses the Medicare Physician Fee Schedule (PFS) to determine how to reimburse physicians for their services. Under the PFS, Medicare considers various elements including the work the physician put in, the expenses incurred in provid...

Inpatient Rehabilitation Facility PPS

This web page provides information and resources related to inpatient rehabilitation hospitals and units, with a focus on Medicare payment and related implementation issues. Visitors to this site may also be interested in learning more about the resources and services of the AHA Consti...

Home Health PPS

AT A GLANCE On June 30, the Centers for Medicare & Medicaid Services (CMS) issued its calendar year (CY) 2024 proposed rule for the home health (HH) prospective payment system (PPS). Comments are due Aug. 29, and a final rule is expected around Nov. 1. New policies will gener...

The 340B Drug Pricing Program

340B Drug Pricing Program at a Glance For more than 30 years, the 340B Drug Pricing Program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs. Section 340B of the Public Health Service Act requires pharmaceutical manuf...

Hospital-Acquired Condition Reduction Program

The Hospital-Acquired Condition Reduction Program ties performance on patient safety issues such as infections, bed sores and post-operative blood clots to payment. Under the program, the Centers for Medicare & Medicaid Services penalizes the lowest performing 25% of all hospitals e...

Hospital Readmission Reduction Program

Through the Hospital Readmission Reduction Program, the Centers for Medicare & Medicaid Services penalizes hospitals for “excess” readmissions when compared to “expected” levels of readmissions. Since the program began on Oct. 1, 2012, hospitals have experienced nearly $2.5 billion ...

Hospital Value-Based Purchasing

The Hospital Value-Based Purchasing Program seeks to improve patient safety and experience by basing Medicare payments on the quality of care provided, rather than on the quantity of services performed. Hospital VBP affects payment for inpatient stays in more than 3,000 hospitals across...

Bundled Payment

Traditionally, Medicare has made separate payments to providers for each of the individual services they furnish to beneficiaries for a certain illness or course of treatment. However, policymakers and providers have become increasingly concerned that this approach may result in fragmen...

Accountable Care Organizations

What Are Accountable Care Organizations (ACOs)? Accountable Care Organizations are groups of clinicians, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care a designated group of patients. While some private plans have contra...

Patient-Centered Medical Homes

According to the Agency for Healthcare Research and Quality, the patient-centered medical home encompasses: 1. Comprehensive care that meets the large majority of each patient’s physical and mental health care needs, including prevention and wellness, acute care, and chronic care. 2. ...

Program Integrity

In recent years, the Centers for Medicare & Medicaid Services has drastically increased the number of program integrity auditors that review hospital claims to identify improper payments. These audit contractors include recovery audit contractors (RACs) and Medicare administrative c...

Psychiatric PPS

Medicare pays for these services through the IPF prospective payment system, which uses pre-determined rates based primarily on the patient’s condition (age, diagnosis, comorbidities) and length of stay, and the location of the IPF. Medicare also provides additional payment for IPFs tha...

Federal Capital Financing

This site names each program, its focus, the types of financing available, and eligibility requirements. Links to each program's website and other capital financing information resources are provided for more information. Preliminary Background on Federal Capital Programs P...