Medicare uses the Medicare Physician Fee Schedule to pay physicians and the Outpatient Prospective Payment System to pay hospitals and other outpatient facilities. Recently, the Centers for Medicaid and Medicare Services (CMS) made changes to physician and outpatient payments. The five-level clinic visit codes or the five outpatient codes have been replaced with a single code. “The chronic care management fee will go into effect in January 2014 and will be the new form of physician compensation. Bundle Payment is a way to pay for high-volume, high-cost hospital procedures. Global payment allows providers to reduce unnecessary care and control spending, but it creates incentives for providers to limit the offering of services. PAYMENT METHODS FOR PHYSICIANS AND OUTPATIENT MEDICINE 3 Introduction Medicare uses the Medicare Physician Fee Schedule to pay physicians and the Outpatient Prospective Payment System to pay hospitals and other outpatient facilities. Recently, the Centers for Medicaid and Medicare Services (CMS) made changes to physician and outpatient payments. The five-level clinic visit codes or the five outpatient codes have been replaced with a single code. The chronic care management fee will go into effect in January 2014 and will be the new form of physician compensation. “These changes are essential if we are to create a healthcare system that delivers better care at lower costs,” Blum (2013). Bundle Payment is a way to pay for high-volume, high-cost hospital procedures. Global payment allows providers to reduce unnecessary care and reduce spending under… half of the paper… In summary, the Medicare payment system aims to contain rising health care costs and allows providers to provide quality, coordinated Medicare care uses the Medicare fee schedule to pay physicians and the outpatient prospective payment system to pay for outpatient facilities. Bundled payment is a way to pay for high-volume, high-cost hospital procedures. Global payment allows providers to reduce unnecessary care and control expenses but creates incentives for providers to limit the offering of services. The Obama administration recently made some changes to doctors and outpatient payment methods. The five levels of clinical and outpatient codes have been replaced by a single code. Doctors will be reimbursed at the chronic care management rate.