HIDA 2016 Medicare Reimbursement Analysis and Outlook
Although the majority of healthcare providers will receive small payment increases from Medicare in 2016, several
face an uncertain reimbursement future. The Centers for Medicare & Medicaid Services (CMS) is accelerating efforts
to tie Medicare payment to quality and outcomes across all provider settings, which will lead to continued shifts in
payment models. Specific provider segments including labs and physicians have even more uncertainty as
congressionally-mandated payment changes are in the works but not yet finalized.
CMS has announced an ambitious plan to base 90% of Medicare fee-for-service payments to a provider’s quality score
and to increase the percentage of Medicare payments tied to alternative models such as medical homes and
accountable care organizations. The CMS planned timeline for these initiatives is:
Tying 90% of fee-for-service payments to quality/outcome metrics by CY 2018
Tying 50% of Medicare payments to alternative models by CY 2018
Current share is 20% ($72.4 billion)
Targeted share is 30% by CY 2016 and 50% by CY 2018
In addition to tying more payment to quality metrics, CMS is working to use consistent measures across the
continuum of care. Of particular note is a mandate from Congress to create a single set of measures to assess patient
care across all post-acute providers.
Another key focus for policy makers is incentivizing the lowest-cost care setting without compromising quality.
Currently, different types of providers receive very different payment amounts for the same service. For example, the
same surgical procedure is assigned different reimbursement levels depending on whether it is performed in a
hospital, a hospital outpatient department, or an ambulatory surgery center. Similarly, CMS is comparing similar
post-acute services provided at skilled nursing facilities, inpatient rehabilitation facilities, and long term acute care
The HIDA Government Affairs team expects continued scrutiny of these payment differences and moves to reward the
On the Congressional front, we do not expect major new healthcare legislation in 2016. With presidential and
congressional elections coming up in November, party leaders will look to protect incumbents from tough votes and
present a united front to voters. Senate Democrats will be focused on netting the five additional seats needed to take
back the majority which they lost in 2014. House Republicans will be working with recently elected Speaker Paul
Ryan (R-WI) to attempt to hold their historic majority in the House.
The HIDA Government Affairs Medicare360 Report, published annually, outlines these key trends and many others. The
report provides a policy outlook for all markets as well as detailed analysis of reimbursement and quality programs.
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