Healthcare providers face $42 billion in cuts in 2018 under Medicare’s traditional fee-for-service program. Those payment rate reductions, which were put in place by the Affordable Care Act, are scheduled to cut deeper with each year—from $53 billion in 2019 to $86 billion in 2022.
No matter what happens with “repeal and replace” or who controls Congress and the White House, the efforts to reign in federal healthcare spending will continue. We simply have no other option, when you consider that Medicare and Medicaid program costs are on track to exceed 8% of our national GDP by 2020.
That means CMS will continue to pursue its goal to shift more payments to risk-based models. By 2018 (just over six months away), at least 50% of Medicare payments will be tied to risk-based models. Perhaps even more significant, 90% of FFS payments will be tied to quality through programs such as the Hospital-Acquired Condition Reduction Program, the Hospital Readmissions Reduction Program and the Merit-Based Incentive Payment System.
A Sustainable Medicare Risk Strategy
The number of Medicare patients is on the rise and will comprise more than half of the average inpatient case mix by 2022. These demographic and economic trends make it imperative for nearly every U.S. healthcare provider to participate in Medicare risk-based payment models, which hold the provider accountable for achieving financial and clinical goals. Practices that choose to ignore this imperative will start seeing deep hits to their revenue within the next few years, if they haven’t already.
A sustainable Medicare risk strategy begins with the following key steps:
As you form your Medicare risk strategy, remember to keep your eyes on the long-term horizon. While the infrastructure investment that will be required to succeed in risk-based models can be significant, look at it as a necessary cost that will ultimately shield you from the very real risk of declining Medicare payments as CMS increasingly ties payments to value rather than volume.
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