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


I ran into Shirley at the local grocery, and while we were only the most casual of acquaintances, Shirley clearly had a story to tell and wanted to talk.   Her husband George had just had a long over due, knee replacement. Planning for this surgery didn’t seem to include a plan for his recovery. The story Shirley had to tell was how the hospital personnel had let her down, coordinating George’s recovery. It seemed that the discharge planner had not fully informed George of his Medicare benefit, that would cover care in a nursing facility. Instead she urged him in the most aggressive terms, to recover at home.

Shirley said, this “hospital woman” talked to them for over an hour, and all she said about skilled nursing facilities, is that George would be in “great danger” of getting an infection. The hospital woman had many scary stories to share with the elderly couple. Stories, about how nursing home personnel had made mistakes and the horror of infection lurking everywhere.

So this fragile, elderly woman drove her husband home after discharge. Now instead of having young hands ready to help at the push of a button, it was only Shirley. She shared that what followed were eight days of arguing, yelling, pain, crying, and anxiousness. Yes, home therapy came, but that was only one hour a day. The rest of the time it was Shirley who was on duty.

George was very qualified under Medicare to go directly to a skilled nursing facility. The major Medicare qualifier, is that you have been admitted to a hospital for 3 days. If you go for an emergency and are only under “observation” that time does not apply to the 3 day rule. You must be admitted for 3 days. As well, the day you are discharged from the hospital, does not qualify as one of the 3 days.

Medicare provides 100 days of coverage in a skilled nursing facility.  Days 1 through 20 are at 100%, days 21 through 100 they pay $161 a day and your coinsurance picks up the balance. After day 101, Medicare no longer pays.  This coverage is for a semi-private (shared) room, includes nursing care, therapy, meals, activities, and all of your medical supplies.

Following those 8 difficult days, Shirley drove George to their local nursing home and he was admitted for 2 weeks. Shirley couldn’t say enough about how wonderful those weeks were. George loved the  meals, therapy, staff and other patients he met there. George is now happily gaining strength at home.  When fully recovered, George is now planning on volunteering at the nursing home, to keep in contact with those kind people who had helped him. And he also wants to give encouragement to the many other “Georges” he will meet.

I was more than sorry to realize that I didn’t know Shirley well enough for her to have called me, and ask about this surgery. We might have been casual acquaintances, but now after seeing this glimpse into Shirley and George’s life, this won’t happen again, we are now trusted friends.

Virginia Garberding RN

Certified in Gerontology and Restorative Nursing