Delivery of and payment for health care services is at a crossroads. Last summer, ASA and other specialties spent a lot of time responding to queries from three congressional committees as they sought to address the very real problem of developing a viable alternative to the Sustainable Growth Rate (SGR) formula. SGR is a large part of the formula used to determine the amount Medicare pays for covered services. To see that it’s not working well, one need not look much beyond the fact that Congress has taken action to override the formula each and every year since 2003.

Ever since November 2011, when the Centers for Medicare & Medicaid Services (CMS) issued the final rule on Accountable Care Organizations (ACOs), we have seen increasing use of bundled payments for both chronic- and episode-based care. Bundled payments – a payer issues one aggregate payment that is to be distributed to...

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