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A recent policy perspective was published in the New England Journal of Medicine March 5, 2015 by the Secretary of Health And Human Services, Sylvia Burwell, on setting value-based payment goals for Medicare [1]. These goals include having at least 30 % of the Medicare payments provided through such mechanisms as accountable care organizations (ACOs) and bundled episodes of care by 2016, rising to 50 % by 2018. ACOs are commonly full risk or risk shared arrangements where the provider is “on the hook” for the cost of care provided to a set group of Medicare enrollees. In other words, if at the end of a period of time (e.g. one year) the cost for care is less than the “yearly budget”, then the provider keeps the difference (e.g. profit). If the cost for care is more than this, the provider is “on the hook” for the loss. As well, bundled episodes for care are a derivative of the diagnostic related group (DRG), which has been in place by Medicare since 1983. DRGs are essentially bundled payments for the hospital portion of a patient’s stay and are acute in nature. Under bundled episodes of care, commonly all provider services (hospital plus physician) are extended past this period of hospital stay in caring for a patient and can include: physician care, hospital care, nursing home care post-hospital discharge, and home care. These same goals were expressed by a representative from Center for Medicare and Medicaid Services (CMS) at a recent (April 10, 2015) Samuel Martin Memorial lecture held by the Leonard Davis Institute (LDI) at the University of Pennsylvania.

Medicare’s Mission to Change How Health Care is Paid for and Delivered: A Cloud with a Silver Lining or Just a Dark Cloud?