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 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 financially 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 PPS

More than three-quarters of the nation's inpatient acute-care hospitals are paid under the inpatient prospective payment system, while nearly a quarter are paid based on costs and are called Critical Access Hospitals. The IPPS pays a flat rate based on the average charges across all hos...

Outpatient PPS

Medicare beneficiaries receive a wide range of services in hospital outpatient departments, from injections to complex procedures that require anesthesia. Payment policies for services furnished in hospital outpatient departments are constantly changing due to technological advances and...

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 providing...

Long-Term Care Hospital PPS

To qualify as an LTCH for Medicare payment, a facility must meet Medicare's conditions of participation for acute care hospitals and have an average inpatient length of stay greater than 25 days. Medicare recognized 436 LTCHs in 2011. In addition to this Web site, AHA members may also ...

Inpatient Rehab 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...

Skilled Nursing Facility PPS

The Medicare program pays for SNF services through a prospective payment system, with per diem payments set according to a patient's utilization of therapy and nursing services. Read on for more information and resources on payment and quality issues facing the SNF field. Of particular...

Home Health PPS

The BBA put in place the interim payment system (IPS) until the PPS could be implemented. Effective October 1, 2000, the home health PPS replaced the IPS for all home health agencies. The PPS final rule was published on July 3, 2000. In addition to this Web site, AHA members may also b...

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 each ...

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 bill...

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

Coordinated care seeks to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. Under Medicare, when an ACO succeeds both in delivering high-quality care and spending ...

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 contr...

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 t...

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...

340B Drug Savings Program

For 25 years, the 340B program has provided hospitals with financial help to expand access to life-saving prescription drugs and comprehensive health care services to low-income and uninsured individuals in communities across the country. Section 340B of the Public Health Service Act r...

Related Resources

Toolkits/Methodology
Member
Hospital-Acquired Conditions (HAC) Penalty Calculator FY 2017 Inpatient PPS Final Rule (Uses HAC List Posted by CMS in Dec. 2016)
Toolkits/Methodology
Member
Infographics
Other Resources
Public
The Issue The Affordable Care Act (ACA) required the Centers for Medicare & Medicaid Services (CMS) to penalize hospit
Legal Documents
Plaintiffs-Appellants, three hospital associations and three hospital systems, move to expedite this appeal from an order dismissing Appellants' co
Letter