The Affordable Care Act and the Medicare Program: Linking Medicare Payment to Quality Performance

Abstract

The Patient Protection and Affordable Care Act (“ACA”), as amended by the Health Care and Education Reconciliation Act of 2010, is signature legislation that will fundamentally change the health care sector of the United States. One of the ACA’s major reforms changes the way in which Medicare pays health care providers and rewards providers for providing high quality care.

Value-based purchasing is a major strategy for reducing the escalation of Medicare expenditures. The theory of value-based purchasing is to change the basis of payment for services from a formula based on events and resources used in an episode of care to a formula based on performance measured by specific quality measures.

This Article reviews the development of value-based purchasing in the Medicare program since its inception. The Article then explains how the ACA expands and enhances value-based purchasing from only inpatient hospitals to physicians and other providers. Then the Article analyzes what the future implications of value-based purchasing will be for the U.S. health care industry.