CMS proposes updates to reimbursement model

Centers for Medicare & Medicaid Services (CMS) proposed updating their reimbursement policies for physicians and other providers. The old system reimburses providers for services rendered (e.g. procedures, lab tests), and it's no surprise that medical care has ended up oriented around services. The emphasis of the prior reimbursement system likely helped fuel the shortage of primary care doctors, since specialists can generally bill significantly more for their procedures than primary care doctors can for their office visits. The emphasis on services likely also contributed to the decline of coordinated care, since providers weren't actually getting paid to spend time to coordinate care for their patients.

CMS recognizes these issues and is trying to address them by changing their reimbursement model. Their recently publicized proposal considers factors such as quality of medical care and systematizing improvements to clinical practice. In theory, this would give providers stronger financial incentives to care about patient outcomes, rather than simply providing a service and moving on to the next patient. Providers who think they can demonstrate particularly cost-effective overall care for their patients can sign up to share risk. That is, providers whose patients are healthy and require less overall procedures should be compensated better than they currently are, and providers whose patients are not healthy and end up costing the system more will be compensated worse.

It's too early to tell what ramifications this proposal might have (e.g. will doctors who sign up for risk-sharing find ways to exclude sicker patients from their care? ), but on the surface, this proposal seems like a great step in the right direction -- especially when considering how strong of an effect reimbursement policies have on the practice of medicine.