Verma: Fee-for-Service Medicare ‘Insufficient’ to Cover Vulnerable Beneficiaries Post-COVID

Early research into the impact of COVID-19 on seniors — both among the general population, and in nursing homes — has revealed endemic connections among race, income, and the likelihood of infection and death.

Those patterns, reinforced by a new set of data probing COVID-19’s impact on Medicare beneficiaries, should prompt a more rapid move toward value-based care, Centers for Medicare & Medicaid Services (CMS) administrator Seema Verma argued Monday.

“Now more than ever, it is clear that our fee-for-service system is insufficient for the most vulnerable Americans because it limits payment to what goes on inside a doctor’s office,” Verma said in a statement. “The transition to a value-based system has never been so urgent. When implemented effectively, it encourages clinicians to care for the whole person and address the social risk factors that are so critical for our beneficiaries’ quality of life.”


Between the start of 2020 and May 16, more than 325,000 Medicare beneficiaries were diagnosed with a COVID-19 infection, according to the data released Monday; that’s 518 cases for every 100,000 total seniors enrolled in the program.

Of those, about 110,000 were hospitalized as a result of the infection, or 175 out of every 100,000 Medicare-eligible seniors.

Black Medicare beneficiaries saw about four times more hospitalizations than their white counterparts, or 465 per 100,000 versus 123 per 100,000, respectively.


Seniors dually eligible for Medicare and Medicaid, historically the most vulnerable subset of seniors in any care setting, had a hospitalization rate of 473 per 100,000, the highest of any sub-group outside of people with end stage renal disease (ESRD), who saw 1,341 hospitalizations per 1,000.

“The disparities in the data reflect longstanding challenges facing minority communities and low income older adults, many of whom face structural challenges to their health that go far beyond what is traditionally considered ‘medical,'” Verma said.

The big-picture data mirrors more targeted research into the characteristics of nursing homes with outbreaks of the novel coronavirus: A probe from the University of Chicago, for instance, found no connections between a facility’s federal star rating and chance of COVID-19 infection, but determined that there was a straight line between the proportion of non-white residents and the likelihood of outbreaks.

“Nursing homes are often a reflection of the neighborhoods in which they are located,” R. Tamara Konetzka, a professor at UChicago’s Department of Public Health Sciences, said in late May. “Consistent with the pandemic generally, nursing homes with traditionally underserved, non-white populations are bearing the worst outcomes.”

A separate study in Connecticut found that, in addition to staffing coverage and star ratings, the proportion of Medicaid and minority residents at a facility was associated with a larger outbreak size.

The post-acute care industry has been on a slow, subtle shift away from fee-for-service Medicare for some years now. Increased Medicare Advantage penetration in many markets, as well as the proliferation of other value-based programs such as accountable care organizations (ACOs), has eaten into FFS Medicare’s share of a given facility’s total income.

Back in February, before the start of the COVID-19 pandemic, Zimmet Healthcare Services Group president Marc Zimmet argued that, given rapidly accelerating enrollment in Medicare Advantage plans among younger boomers soon after turning 65, fee-for-service Medicare is already being phased out by attrition in many markets.

“It’s happening organically,” Zimmet said. “It’s happening: Medicare is being privatized by Medicare Advantage, any way you slice it.”

The Medicare Payment Advisory Commission (MedPAC) called for CMS to accelerate the shift to value-based payments in its June 2020 report to Congress, released last week.

“The Commission asserts that the Medicare program must continue to move away from traditional fee-for-service payment approaches and develop new payment models that promote the use of value-based payment,” the non-partisan group, which advises Congress on Medicare payment matters, said in a statement. “Accountable care organizations and Medicare Advantage plans could serve as the foundation for these new payment models, but both need to be improved to realize that potential.”

In its Monday release, CMS called for a collaborative strategy in shifting away from FFS.

“Given the complexity of these disparities, any solution requires a multi-sectoral approach that includes federal, state, and local governments, community based organizations, and private industry,” the agency noted. “One piece of this is the increased implementation of a value-based system that rewards providers for keeping patients healthy and gives consumers the information about disease prevention and outcomes needed to help make healthcare choices on the basis of quality.”

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