March 2015 – Moving from Fee for Service to Fee for Value

For most of our lifetimes, Healthcare in the United States has been paid for in a Fee For Service model.  Currently, Medicare pays the majority of money in a fee for service program. Fees are paid after visits are made, procedures and tests done, or medicine given. This past January, U.S. Secretary of Health and Human Services Sylvia M. Burwell said reforming Medicare payment is a priority. The Commonwealth Fund in their report “Mirror Mirror On The Wall-2014 Update” showed that 10 other countries ranked ahead of the U.S. in Healthcare. A big part of the reasoning behind this relates to the cost expended relative to the results achieved. This has led to the need for alternative reimbursement models.  By the end of 2018, four years from now, 50% of all Medicare dollars paid to doctors and hospitals will come from these alternative reimbursement models as outlined in the communication from  For more information on the communication from, please click here. 

Your Northern Physicians Organization (NPO) is involved in some of these alternative models with Patient Centered Medical Homes, Northern Michigan Health Network (NMHN) and it’s Accountable Care Organization (ACO), as well as the Organized System of Care (OSC) with Blue Cross Blue Shield. Across the United States, and especially in Northern Michigan, physicians are practicing state of the art health care of the highest quality. The problem is that we have collectively run out of money and must find ways to achieve the Triple Aim of increasing the patient experience, improving outcomes AND decreasing cost. We must decrease the waste by collaboratively working across the continuum of healthcare. Physicians must communicate and work with each other, hospitals must work with physicians and other hospitals, payers must work with physicians, hospitals, patients and other stakeholders. All of these entities must increase efficiencies and decrease bureaucracy. A LEAN exercise can be a very impactful process for all these entities. As a healthcare community we collectively have a fabulous opportunity to fix much if not all of this broken system. It will take great effort, great trust and require great risk taken by all involved parties. The reward will be excellent, efficient, quality healthcare for all. Next week I will look at the cost of healthcare and where this cost originates. You may be surprised at the results. Again, I am not meaning to provide exhaustive dissertations but rather stimulate food for thought as well as motivations for physician engagement. Please contact me or the NPO office with questions or comments.

Peter Sneed, MD

President, Northern Michigan Health Network

NPO Board Member


Lost your password? Reset it..