Modernize Medicare Provider Payment

NCHC Writer
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Fifty-five million Americans  including seniors, disabled citizens and patients facing ALS and end-stage renal disease – depend on Medicare. Medicare payments to providers and plans total nearly $600 billion per year, totaled $620 billion in 2014, accounting for 20% of our $3 trillion in national health expenditures and 14% of the federal budget. Improving Medicare payment is a high stakes endeavor for beneficiaries and taxpayers alike.

Fortunately, a close look at Medicare spending reveals an opportunity to deliver better care at lower cost. The data show substantial variation among regions and among providers in the volume of services provided, without a clear relationship to care quality or patient health out­comes. Changing Medicare’s reimbursement policies can facilitate the spread of higher-value care across the country. And because Medicare, the largest payer for health care in the United States, has historically served as a catalyst and a template for private sector provider reimbursement changes, improving Medicare payment practices can also promote positive change in the rest of the health care system.

Expand and Refine Successful Alternative Payment Models
Alternative payment models such as Accountable Care Organizations (ACOs), bundled payments and advanced primary care models are already delivering on the promise of better care at lower costs. To realize that promise for more Medicare beneficiaries and ensure the Medicare program receives the maximum benefit from these new models, NCHC recommends that policy makers:

  • Expand the use of bundled payments as evidence accumulates about the conditions for which they are effective—while maintaining strong consumer protections.
  • Give ACOs flexibility to tailor care to the needs of beneficiaries by waiving those payment and benefit regulations originally designed to restrain volume in the fee-for-service payment environment. Additionally, transition to savings targets based on regional spending instead of individual providers’ past performance, to encourage the most efficient providers to continue to participate.
  • Expand advanced primary care and medical home models when proven successful

To ensure that federal policy supports the development of the next generation of alternative payment models, NCHC strongly supports the preservation of the Centers for Medicare and Medicaid Innovation’s existing authority and funding.

Reform Medicare’s Legacy Reimbursement Systems
Any serious attempt at reform cannot stop with the promotion of alternative payment models. Over 25 million beneficiaries are neither enrolled in a Medicare Advantage plan nor have their care coordinated through a Medicare ACO or CMMI advanced primary care payment model. In addition, traditional Medicare’s reimbursement policies and rates remain critical components of the payment formulae for the MA plans, ACOs, and alternative payment models now undergoing testing at the Center for Medicare and Medicaid Innovation (CMMI). NCHC supports the following improvements:

  • Reform existing skilled nursing facility and home health payment systems
  • Implement value-based payment across post-acute settings
  • Ensure effective implementation of the Merit-Based Incentive Payment System (MIPS), enacted as part of the 2015 SGR reform legislation


Primary Care: Its Essential Role in Value-Based Care (February 2017)
Joint letter to the Administration urging support for value-based care movement (January 2017)
Letter to Congressional Leadership regarding Payment Model Testing and Expansion (December 2016)
NCHC Comments on Post Acute Care Value Based Purchasing Act of 2015 (September 2016)
NCHC Comments on Proposed Physician Fee Schedule Rule (September 2016)
NCHC Comments on MACRA Implementation (June 2016)
NCHC Letter on Proposals to Delay Comprehensive Care for Joint Replacement Model (March 2016)
NCHC Response to Chronic Care Working Group’s Policy Options Document (January 2016)
NCHC Leadership Letter on Proposals to delay CJR Implementation (December 2015)
NCHC Letter on Request for Information Regarding Medicare Access and CHIP Reauthorization Act of 2015 (November 2015)
NCHC Comment Letter on the CY 2016 Medicare Physician Fee Schedule (September 2015)
NCHC Letter to Senate Finance Committee Chronic Care Working Group (June 2015)
NCHC Letter on Possible Expansion of the Bundled Payment for Care Improvement (BPCI) Initiative (June 2015)
NCHC Forum – After the SGR: Building a Transformed Payment and Delivery System (April 2015)
Joint Letter on the Proposed 2015 Medicare Shared Savings Program Rule (February 2015)
Joint Letter on Passing SGR Repeal and Reform Legislation During Lame Duck (November 2014)
NCHC Forum – Health Policy after the SGR: What’s Possible in Value-Based Payment and Benefits (May 2013)
Joint Letter Urging SGR Reform in 2013 (April 2013)