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Newsletter Article


Pay for Value: Changing How Medicare Reimburses Providers

In the last few years, Medicare and other purchasers of health services have sought to link provider payments to the quality of care delivered to patients. One major obstacle Medicare faces, however, is the rigid formula the program must use to calculate physician payments—a method designed to control costs but one that actually impedes the move to high-value care.

In a new issue brief, Commonwealth Fund experts propose a set of policies to replace Medicare’s “sustainable growth rate” formula with a payment system that would strengthen primary care, offer incentives for physicians to participate in innovative delivery systems, require accountability for health outcomes and the total costs of care, and reward providers for adopting best practices. Based on recommendations from the Commonwealth Fund Commission on a High Performance Health System, the policies outlined by the authors have the potential to reduce national health spending by $1.3 trillion over 10 years, compared with projected trends.

Visit to read the brief and view our infographic to see how Medicare could save billions while accelerating health system reform.

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