The continued march towards better outcomes

For a while now, Medicare has been transitioning away from strictly flat-fee payments (fee-for-service). For example, a while back, Medicare introduced the concept of bundled payments for hospital procedures, where hospitals are reimbursed one total amount for an inpatient visit, regardless of the hospital's cost. It has since moved on to rewarding those hospitals that perform well on certain quality metrics and imposing penalties on hospitals with high readmission rates. On the individual physician level, Medicare started to pay doctors extra if they used a certified electronic health record with the HITECH Act. Medicare also started paying for doctors to report certain outcome information via a program known as PQRS.

While the payouts of the physician programs have been a relatively small portion of the overall Medicare payments, last year, Medicare announced that they aspire to link 30% of their payments to getting better results and better value. That percentage is to rise to 50% in 2018. That they recently reiterated those goals suggest that maybe we will see a significant shift in payments, and therefore practices. It'll be interesting to see how much that percentage actually changes throughout 2016.