Medicare Value-Based Payment Reform: Priorities for Transforming Rural Health Systems


In January, 2015, Department of Health and Human Services (HHS) Secretary Burwell announced new goals and timelines for moving Medicare reimbursement from fee-for-service to value-based payment. These payment changes are driving delivery system reforms (DSR) by making healthcare organizations more accountable for patients' health as well as population and community health. Payment and delivery system reform, however, is concentrated in urban centers, and Medicare rural payment policies that were designed to strengthen rural health providers and systems are now complicating payment and delivery system reform in rural areas. The inclusion of rural providers in Medicare payment reform is critical for the program and for the 23 percent of Medicare beneficiaries who reside in rural areas. Rural Medicare beneficiaries should have the same opportunity as their urban counterparts to benefit from payment reform's positive effects including strengthened primary care, embedded care coordination, and improved clinical quality. In this paper, we describe five recommendations to facilitate rural inclusion in value-based payment and delivery system reform:

  1. Organize rural health systems to create integrated care.
  2. Build rural system capacity to support integrated care.
  3. Facilitate rural participation in value-based payments.
  4. Align Medicare payment and performance assessment policies with Medicaid and commercial payers.
  5. Develop rural appropriate payment systems
RUPRI Health Panel: Rural Policy Analysis and Applications
Keith Mueller, Charles Alfero, Andy Coburn, Jennifer Lundblad, Clint MacKinney, Tim McBride