Universal HealthcareBy NextBestFit
Phase 1: Enactment & build · Step 1.7

Set the national fee schedule

Months 3–15; annual updates thereafter · Payment Rates Board; UHADiscuss this step

How providers are paid

What payment methods does UHP use?

The plan chooses
Hospitals: an annual global operating budget negotiated regionally, based on prior-year costs adjusted for volume, case mix, and quality, plus a separate capital budget approved by regional planning boards. Physicians and other clinicians: a national fee schedule based on Medicare's RBRVS, rebalanced toward primary care, with optional per-patient capitation for primary-care practices. Integrated systems (Kaiser-style) can take a single capitated global budget for their enrolled population. Balance billing is banned.

Global budgets are how Canada and Maryland control hospital spending growth. Separating capital from operating budgets ends the arms race of hospitals building profitable service lines to attract commercially insured patients. Keeping fee-for-service for physicians avoids a capacity collapse during the transition, because physicians know how to bill RBRVS codes today.

Global budgets + fee schedule (chosen)

As described.

Pros
  • +Predictable total spending: hospitals are 31% of NHE
  • +Hospitals stop needing billing departments for per-claim adjudication
  • +Capital planning targets underserved regions
Cons
  • −Global budgets can reward doing less Canadian hospitals ration OR time near year-end.
  • −Freezes existing inequities if based on historical costs
  • −Regional capital boards can be captured by incumbent systems

Precedent: Canada, Maryland (since 2014), Pennsylvania Rural Health Model.

Per-case payment (DRGs) for hospitals

Keep Medicare's diagnosis-related-group payments at UHP rates.

Pros
  • +Rewards hospitals that do more cases, which shortens queues
  • +Infrastructure already exists
Cons
  • −Weak total-spending control
  • −Encourages upcoding

Precedent: Germany (G-DRG), France (T2A), Medicare.

Activity-based funding with volume caps

Pay per case up to a budgeted volume, then at a reduced marginal rate.

Pros
  • +Combines the volume incentive with cost control
Cons
  • −Complex; hospitals game the threshold

Precedent: Germany's volume-dependent markdowns (Fixkostendegressionsabschlag).

What this choice gives up
  • Per-case volume incentives that shorten waits.
  • Hospital independence over capital investment decisions.
Sources: CMS Innovation Center / RTI (2023); Medicare Payment Advisory Commission (2025)

Payment rate levels

How much does UHP pay relative to today?

The plan chooses
Hospitals: 120% of Medicare on average. Physicians: 112% of Medicare on average (primary care 125%, procedural specialties 105%). Rates phase in over four years from each provider's current blended rate. A temporary Hospital Transition Fund ($38.3B in total) cushions systems that depend on commercial revenue.

Paying Medicare rates (100%) would cut hospital revenue by roughly $223.3B a year, and MedPAC already finds Medicare margins negative, so closures would follow. Paying today's blended commercial rates would forfeit most of the savings. 120%/112% is roughly neutral for hospitals overall once billing costs fall, and it raises rates for Medicaid-heavy and rural providers.

Medicare rates (100%)

As in early Medicare for All scoring.

Pros
  • +About $223.3B a year more savings on hospitals and $113.0B on physicians than the plan (the lean case shows a partial version)
Cons
  • −Hospital closures, especially systems with 40%+ commercial revenue
  • −Physician opt-outs rise, which lengthens waits

120% hospitals / 112% physicians (chosen)

As described.

Pros
  • +Hospital revenue roughly flat in aggregate (−1.1% in the central estimate)
  • +Primary care gains
Cons
  • −Large redistribution among hospitals Hospitals heavily reliant on commercial insurance lose 15–30% of revenue.
  • −Smaller price savings ($208.0B overall)

Current blended rates

Pay each provider what it earns on average today.

Pros
  • +No provider loses revenue
Cons
  • −Price effect near zero: total spending would rise about $350B
  • −Locks in the market-power price differences between systems
What this choice gives up
  • The higher incomes of providers that are commercially dominant today.
  • About $336.3B a year of additional savings that Medicare-level rates would capture.
Sources: RAND Corporation (2024); Medicare Payment Advisory Commission (2025); Congressional Budget Office (2020)