HHS Introduces Patient-Driven Payment Model

Published July 20, 2018

The new patient-driven model will go into effect in October 2019.

“This spring, I laid out four areas of emphasis for building a system that delivers value: maximizing the promise of health IT, improving transparency in price and quality, pioneering bold new models in Medicare and Medicaid, and removing government burdens that impede care coordination,” Azar said in remarks to the American Health Care Association/National Center for Assisted Living Convention on June 5. “The common thread for these priorities is the recognition that value is not accurately determined by arbitrary authorities or central planners. The best way to identify and reward value is a marketplace of many players: providers, patients, and, where necessary, third-party payers.

“As our country ages, the systems we have for caring for older Americans must change,” Azar said. “One reason is that the finances simply will not work. We need higher-quality, lower-cost settings for caring for older Americans with serious health conditions.”

‘The Right Direction’

Justin Haskins, executive editor and research fellow at The Heartland Institute, which publishes Health Care News, says the new model will link payments to patients’ health instead of merely reimbursing for whatever services physicians and other care providers perform.

“The Trump administration’s Patient Driven Payment Model would help move America in the right direction by substantially reducing paperwork for skilled nursing facilities and instituting a system that links payment amounts to patients’ conditions, not merely the amount of services provided,” Haskins said. “By emphasizing patients’ needs, not the volume of services, providers will be more likely to act responsibly when determining which health services to give to patients, helping to keep some Medicare costs in check.”

Considering Age Groups’ Needs

Azar told the convention attendees HHS embraces the idea of “rethinking a whole model of payment if the status quo could be improved for patients.” Azar also mentioned “leading and trailing waves” of baby boomers who want significantly different kinds of health care. Trailing, or younger, baby boomers want to remain in their homes or near family as they age, making consumer-driven care particularly important for this population, Azar said.

“The trailing wave of boomers also has more exposure to consumer-driven elements of our health care system, like choosing from a wide array of insurance options from their employer,” Azar said. “They have much more experience interacting with health care technology … [but they] have challenges as well: they have higher rates of diabetes, for instance, than older boomers. They will need more healthcare services, especially for chronic conditions, sooner than the earlier boomers did.”

Medicare Survival

Haskins says Azar’s model will play a large part in making sure programs designed to protect aging populations are properly maintained and funded in the future.

“By 2040, the United States is projected to have more than 100 million elderly adults, which means important reforms such as the one proposed by Sec. Azar will be an essential part of ensuring Medicare survives the twenty-first century,” Haskins said.



Health and Human Services Secretary Alex Azar, “Remarks on Value-Based Transformation for Post-Acute Care,” American Health Care Association/National Center for Assisted Living, June 5, 2018: https://www.hhs.gov/about/leadership/secretary/speeches/2018-speeches/remarks-on-value-based-transformation-for-post-acute-care.html