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Obama Administration Outlines Plans to Reform How Medicare Pays Doctors, Hospitals

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The Obama Administration plans to reform the way the Medicare program makes payments to hospitals and doctors.

On Monday, Jan. 26, the U.S. Department of Health and Human Services (HHS) announced that rather than paying money to healthcare providers for every procedure performed, they will also be assessed after evaluating that patients are healthy. HHS suggests that the goal is to make 30 percent of Medicare payments this way by 2016 and 50 percent by 2018.

"HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs," stated the HHS.

This is the first time in Medicare's history that HHS has underlined goals for value-based payments and alternative payment models.

The latest announcement is one of the major efforts to transform the method of payments made to doctors and hospitals. Experts believe that the key focus of the transformation is to improve the quality of services that people receive from their healthcare providers.

Policymakers are in agreement that the nation's healthcare system should shift from rewarding hospitals and doctors for the volume of work they do to the care that they offer to patients.

The reform in the payment system is definitely meant to improve the care of patients but at the same time it will also help the government to reduce wasteful spending.

The current Medicare payment system costs U.S. taxpayers billions of dollars each year. However, critics suggest that the current system does not discourage any overuse of the healthcare system. The system should hold doctors accountable for improvements in a patient's medical condition.

The agency will penalize hospitals for unnecessary or excessive readmissions and also reward hospitals when they achieve quality metrics.

HHS Secretary Sylvia M. Burwell believes that the latest announcement will drive transformation and help the government track progress. The reform will make doctors and hospitals more accountable for their work.

The announcement did not reveal a detailed plan that outlines the transition efforts but certain changes are already underway. Similar reforms are also being undertaken in the private sector and with commercial insurers. Major employers are also investing in new payment models.

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