Obamacare changed the Medicare payment system, by going from a pay for service system to a system based on patient outcomes.

  • In 1980 the largest change came to the Medicare payment system,  since the 1960’s. Medicare would now give a set amount of funds for specific populations. If the person’s cost of care turned out to be higher than that number, the health care provider lost money. But if the person’s care turned out to cost less the health care provider made money.
  • In the 1990’s diagnosis related groups were introduced. Certain diagnosis groups were paid a set fee for care service, at a binding price. If the service provided cost less there was a profit, if the service provided cost more there was a loss on that patient.
  • In 2010 the Affordable Care Act passed, this would change the Medicare payment system to one of patient outcomes, and would be rolled out in stages.
  • In 2012 the largest change was enacted, value- based purchasing. Valued based purchasing is a method that pays based on patient outcomes rather than services. Before this, it was standard practice to order more tests, and because payment was based on services, patient care would then cost more. Now the focus was squarely on the patient’s outcome to be eligible for payment. (see blog on how Obamacare affects Doctors)
  • 2013 – Medicare begins to enact penalties for hospital re-admissions, resulting in loss of reimbursement.
  • 2015 – Big change for health care institutions, when Medicare eliminated reimbursement for treatment of hospital acquired conditions. Now if you entered a hospital infection free, and as a result of being in that hospital you acquired an infection.  The hospital would not be reimbursed by Medicare for the treatment of that infection.
  • Going forward – Nursing Homes would begin a Medicare payment system of reimbursement on patient outcomes, as well as the patients perception of their care, rather than the fee for service system.

Virginia Garberding RN

Certified in Gerontology and Restorative Nursing