Lexology May 16, 2024
The Search for a Lower-Cost Alternative to Fee-for-Service
Under fee-for-service (FFS) payment arrangements, providers earn more when they do more, which tends to drive up costs. As an alternative to FFS payment, value-based care (VBC) can lower healthcare costs by changing providers’ financial incentives. VBC arrangements encourage providers to practice medicine that prevents the need for more costly care in the future while discouraging them from delivering unnecessary care or ordering unnecessarily expensive care.
Medicare operates VBC arrangements through the Medicare Shared Savings Program (MSSP) and Center for Medicare and Medicaid Innovation (CMMI) payment models. Medicare Advantage (MA) plans also operate VBC arrangements. In 2022, 41 percent of Traditional Medicare payments and 57 percent of MA payments were made through...
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