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Medicare changes meant to reward 'value over volume'

FARGO—An overhaul of the Medicare payment system gives a big nudge toward efforts to reward "value over volume" and offers support for rural health providers.

Those are among highlights cited by administrators at Essentia Health and Sanford Health in evaluating the so-called "doc fix" legislation recently passed by Congress.

Proponents of the legislation say it will eliminate the need for almost annual tweaks to ensure physician payments under a formula are adequate—a ritual that became known as the "doc fix."

"From a financial perspective, it gives us some certainty for the future," said Michael McDonald, vice president of public policy for Essentia Health.

Over time, incentives will grow for health providers to embrace payment systems based on better outcomes, as opposed to the traditional "fee for service" method of paying based on performing procedures.

Essentia and Sanford both backed the changes, supported by the North Dakota and Minnesota delegations, as steps in the right direction that continue efforts by public and private payers.

"Essentia sees what the writing on the wall is," McDonald said, adding that Essentia already operates in that environment as a so-called "Accountable Care Organization" under the health reform law.

The focus on paying physicians and other health providers based on outcomes instead of "fee for service" should benefit many providers in Midwest states, including Minnesota and North Dakota.

That's because providers in both states historically have delivered care at lower costs and achieved better outcomes than those in many areas, health providers and congressional members have said.

Patients also will benefit from getting care that is better and more cost-effective, said Cindy Morrison, an executive vice president at Sanford.

"Everybody wins," she said. The payment system will do a better job of paying for managing complex, chronic diseases, for example, she said.

The new incentives, which are phased in over time, accelerate a trend that has taken hold over the past five years to move away from traditional "fee for service" to one that measures and rewards better quality, Morrison said.

Inevitably, further adjustments will be required. "I think this is a work in progress," she said.