The payment system for services has been based on Fee for Service (FFS) for the past several decades. This system was simple: – services provided for outpatients were tracked with a CPT® code. This code carried an associated reimbursement for the hospitals and if the code had professional component for the physician.

This reimbursement varied based on geography. The reimbursements for these CPT® codes are published at least once annually, usually in December, for the hospitals via a document called the OPPS Addendum B Final Rule. The rates established by this addendum applies to Medicare allowable rates only. Commercial payers set their rates based on negotiated contracts.

This system over time promoted quantity over quality. It also increased the administrative burden and cost for the facilities as each code must be reviewed before submitting for payment.

The goal of moving to a VBC model and away from an FFS model is to drive the cost of healthcare down.

The upward trend we have seen in the cost spend on healthcare is not sustainable. This will continue to take time; the price transparency rule will provide the data from the hospitals that we can use to baseline and associate with the cost to provide services and care with outcomes.