Today, Medicare pays healthcare providers a fee in exchange for services which are rendered. Most healthcare providers including hospitals and doctors either accept the fee which is offered by Medicare or negotiate independently with healthcare insurance providers and private parties for a different fee. For years, many have argued that the Fee For Service model is inefficient, provides no value to the goal of improving healthcare, and is often unrelated to the actual costof services provided.
On January 26, 2015, Health and Human Services Secretary Silvia M. Burwell announced that the government’s Medicare reimbursement plan intends to change the model under which it reimburses healthcare providers. It will abandon the traditional fee for service model and adapt a “quality” or “value based” model no later than 2018. If it can be accomplished, this transition represents a sea change in the way healthcare providers are paid and healthcare providers of all types should sit up and take notice.