Defining a Future for Fee-for-Service Medicare

Health Affairs - May/June 2006
Vol. 25, No. 3
May/June 2006
Foote, S. and G. Halaas
pp. 864-8

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) provides economic incentives that favor health plans over traditional fee-for-service (FFS) Medicare. This reflects an ideological preference for private plans rather than government-administered pricing and recognition that private plans can use tools effectively to improve quality. However, enrollment projections indicate that FFS will continue to attract the majority of beneficiaries for years to come. We argue that MMA’s contractor reform provisions create the opportunity to build critical FFS infrastructure, and contractors have the potential to encourage quality and manage utilization to compete with private plans in a modernized Medicare.

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