The Patient Protection and Affordable Care Act [i] (PPACA), commonly known as the health care reform law, will likely have a more far-reaching effect on health care in America than even the passage of Medicare. Much of the controversy surrounding PPACA has arisen from its impact on private health insurance and the law’s intention to expand coverage of the uninsured. This series of articles discusses two among the many mechanisms in PPACA that seek to control the growth of health care costs: value-based purchasing and the shared savings program.
Whatever one’s views may be of individual and employer insurance mandates, guaranteed issue and the multitude of other insurance industry changes, both proponents and opponents of health care reform recognize that “bending the cost curve” is essential for the nation’s long-term welfare.
The Congressional Budget Office estimated in 2008 that projected health care spending would likely rise from 17% of gross domestic product in 2007 to 25% in 2025.[ii] With PPACA’s expansion of health care coverage, the danger of out-of-control health care costs becomes even greater.
While both value-based purchasing and the shared savings program are Medicare initiatives, private payors have often piggy-backed on Medicare payment changes such as the reduction in payment for hospital-acquired conditions. If these initiatives are successful in reducing Medicare program costs, private payors may well follow suit.
Articles in this Series
Value-based purchasing – "linking payment to quality outcomes under the Medicare program."
Shared savings program – rewarding accountable care organizations that reduce average per capita Medicare expenditures while meeting quality performance standards.
About the Author
Patricia King is a health care attorney in Illinois, and principal of the web-based business Digital Age Healthcare LLC (http://www.digitalagemd.com/).