Hospitals unclear on payment

Politico, October 12, 2011

Michigan's Henry Ford Health System seemed like the perfect candidate for the most ambitious Obama administration effort to change the way Medicare pays hospitals. So it puzzled observers when it withdrew its application last month from a program that puts it on the fast track to becoming a Medicare accountable care organization, which would reward hospitals for delivering high-quality care at lower cost. The reasons Henry Ford dropped out from the administration's Pioneer program reflect the challenges facing hospitals that are choosing between multiplying payment reform initiatives. In short, it had better options -- or, at least, more predictable ones -- than the ACO program. It's widely agreed that the fee-for-service model that Medicare has long used to pay providers is not sustainable because it drives up health spending. But two things are making it hard for hospitals to move forward: the uncertainty about which new payment experiments are going to pan out and the unpredictable rollout of federal initiatives.


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