Medicare Payment Structure

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Since Medicare’s inception in 1965, it has been pleased with its ability to provide a federal universal entitlement medical coverage for the elderly population aged 65 years and older with little concern of the cost to execute the program in the future. Without regard of income or health status, all elderly Americans are covered provided they or their spouse has worked for at least 10 years (CMS, 2018). Designed strictly as a payer of care, Medicare was not intended to reform healthcare. Middle men such as Blue Cross and Blue Shield were chosen as intermediary private carriers to administer payments to providers. Additionally, payment structure was explicitly based on costs of services rather than negotiated rates (Nickitas, Middaugh & Aries, …show more content…
This regulated how hospitals were payed yet physicians were paid based on their usual and customary fees. Nonetheless, in 1989, another shift in Medicare payment structure would affected physician. With the American Medical Association’s monitoring and assigning, relative value units (RVU) are used to calculate physician charges. Until implementation of the Affordable Care Act, these have been the only significant measures taken to contain expenses of Medicare coverage. As the control of Medicare increases in the healthcare setting, it is surprising that it has not changed its payer of care structure. Changes have been implemented on what or how hospitals and physician may receive payment, however little has change on the patient side. Patients may seek medical care from whomever they choose without restrictions. They do not have to wait for referrals and authorizations as do most Americans that possess employer or private health insurance coverage. Medicare Part C, also known as Medicare Advantage, was initiated to provide a supplemental coverage for offset patient’s copays under Part B however, this plan cost more per enrollee than traditional fee-for-service coverage (Nickitas, Middaugh & Aries,
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