Transcript: How new Medicare payment models tie pay to outcomes
An AI-generated audio overview (Google Gemini), transcribed by machine on Blaine's Mac (Whisper). The audio was checked against primary sources; what it gets wrong is listed at https://blainomd.com/learn#audio-cms-ties-revenue-outcomes

Welcome to this personalized deep dive. Today, our mission is to decode a pretty dense but incredibly important stack of research on emerging CMS reimbursement models.
That's Medicare and Medicaid services.
Right. Just stuff that really drives the industry.
Exactly. We are going to show you how the entire financial foundation of U.S. health care is basically transforming right under our feet.
OK, let's unpack this. For decades, the system has relied on reactive fee for service billing.
You get sick, they treat you, they bill for the activities.
Yeah, but now we're seeing this massive shift toward proactive value-based care.
And a huge piece of this is the new lead model launching on January 1st, 2027.
I was reading through the briefs and it mentions this model finally eliminates something called the ratchet effect.
Oh, man. Yeah, that is a massive relief for them.
What exactly is that? Why are clinics so relieved to see it go?
Well, historically, the ratchet effect essentially punished clinics for doing a good job.
Wait, punish them?
Yeah. Because if a clinic successfully lowered health care costs one year, Medicare would just lower their future funding benchmarks.
You were penalized for your own efficiency.
Wow. So they were essentially trapped by their own success.
Right. What makes the L.A. model so revolutionary is that it offers a 10-year decade of stability.
They get a stable target so they can actually plan long term.
In fact, the planning for a two-state Medicaid integration strategy under this model begins immediately next month in March 2026.
Okay, that makes total sense.
But if they aren't just billing for every single test and procedure anymore, how are they actually tracking success?
What's fascinating here is the sheer mechanics of how they are tying outcomes to payment.
Take the ERA framework, which sits inside these broader models.
It introduces what they call shadow bundles for specific events, like falls prevention.
Shadow bundles. That sounds a bit like a covert operation.
It kind of does.
It's basically tracking the costs and outcomes of a specific event, like an older adult falling behind the scenes.
Even if it isn't billed as one big package yet, it creates a direct revenue pathway to reward specialists, specifically for keeping patients mobile.
I see.
But the real game changer is the ACCESS model, which launches July 5th, 2026.
It introduces an outcome-aligned payment structure.
Under ACCESS, clinics get 50% of their payment up front.
The remaining 50% is strictly withheld.
Wait, 50%. So a clinic could literally lose half its revenue for a treatment if the patient doesn't actually get better.
Exactly. They do not see a dime of that back half unless they can prove actual, measurable patient improvement.
For example, if someone is dealing with chronic musculoskeletal pain, the clinic has to show documented functional improvement metrics to unlock the rest of that funding.
Here's where it gets really interesting, because if your revenue depends on a patient actually improving, you have to look way beyond just prescribing pills.
That brings us to the Meho Elevate initiative.
Right, the new grant program.
Yes. The funding notice for this is dropping right now in early 2026, and they are offering 30 grants of $3 million each to impartially test whole person interventions.
Which is a huge departure from the norm.
They are funding trials for things Medicare doesn't typically cover.
We're talking about prescribing sleep hygiene, physical activity, and even social connection as actual funded medical interventions.
Imagine being a hospital CFO and realizing your annual budget now relies on whether your patients are getting eight hours of sleep and hanging out with their friends.
It's a whole new world.
And if we connect this to the bigger picture, it explains why clinical measurements are getting so incredibly granular.
To get paid under these new models, you can't just vaguely say a patient is feeling better.
Technical success relies on hyperspecific metrics.
Right. The research noted that severe muscle loss sarcopenia is now officially recognized as a disease for billing purposes.
Exactly. Under code M62.84.
A key example from the research is quantifying frailty through appendicular skeletal muscle mass, or ASM.
They aren't just looking at a patient and saying they look weak.
They need the hard numbers.
Yes. They are looking at exact muscle mass indexes because the data shows that dropping below certain cutoffs, like a 7.0 index for men, is a far superior predictor of future falls and mortality.
So exact muscle mass literally translates to medical risk, which translates directly to the clinic's financial bottom line.
So what does this all mean for you?
Whether it's the carrot of those access outcome-aligned payments or the stick of the team model, which brings in mandatory 30-day surgical bundles holding hospitals fully accountable for all costs a month after a procedure, the message is clear.
The financial DNA is rewiring.
Yes. The healthcare system is completely rewiring its financial DNA.
It's shifting from a system that profits off treating your sickness to one that actually generates revenue by keeping you healthy.
Which leaves you with a final provocative thought to explore on your own.
If the entire financial weight of the U.S. healthcare system is pivoting to rely on quantifying exact muscle mass and tracking daily sleep hygiene to generate revenue,
how soon until the personal smartwatch on your wrist becomes the primary tool that dictates our national healthcare budgets.