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  • Diego Loinaz-Martin

Tectonic Changes in Traditional Medicare

If anything characterizes the healthcare field it is its propensity to change.  Known are the tendencies toward to Pay-For-Performance which started with an article by Michael Porter in 2003, took its first steps by Executive Order of President Bush, and progressed through various initiatives such as STARS and Quality Initiatives in Medicare Advantage plans.  The Affordable Care Act certainly laid the groundwork for expansion to all corners of our field with Accountable Care Organizations and Bundled Payments, as well as many other innovations.

One of the least dynamic programs of healthcare has been traditional Medicare.  

However, a few days ago, the Secretary of Health and Human Services, the Honorable Sylvia Burwell, issued a press release to precisely transform Medicare into reimbursement for services based on clinical performance criteria; lately known as Value-Based-Purchasing. With this initiative, the Fee-For-Service bastion is flanked by considerations of value rather than volume.  In unparalleled fashion, Burwell is committed to transforming Medicare reimbursement according to an aggressive implementation schedule.

Below is a brief illustration of the itinerary:

Total Reimbursement Subject to Value or Quality Initiatives

2016: 30% Alternate Models vs  85% All Models 2018: 50% Alterante Models  vs  90% All Models

In Puerto Rico, well over 70% of patients are served through Medicare Advantage Organizations.  Some local MAOs have already implemented, or are transitioning to, service models subject to reimbursement based on value or quality.  However, we anticipate accelerated growth with this momentous news.  Beyond Medicare, and without a doubt, the determination will have a cascading effect to the Government Health Plan ("Reform") and individual and group plans known locally as Commercial Plans.  Although the transition will occur over time, we can expect a proliferation of reimbursement models in all lines of business.  For now, plan determinations based on Quality and Value are already impacting the operations and finances of organizations and health care providers.

It behooves us all to conduct an analysis on the implications of each of our companies, and set strategies ahead of the expected changes. Because if there is one constant, its change.

As always, we are here to support your legal, strategic and operational objectives.

Thank you for trusting our Firm.

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