Opinion: Reinventing healthcare payment models


The two nonprofits we lead represent hundreds of large employers and other health care purchasers, who together provide health insurance to approximately half of all Americans. For over a decade, our members have demonstrated a keen interest in value-based payment strategies that lead to better quality and affordability. These provider payment models should be more widely implemented, for many reasons.

Health care costs continue to escalate at an unacceptable rate. More Americans are struggling to afford health care, and life expectancy has plummeted for two straight years.

The old fee-for-service approach to paying healthcare providers further increases costs by incentivizing providers to use more services, while discouraging them from investing in care delivery models that improve appropriateness care and avoid the need for medical services in the first place — keeping people healthy.

We know that a value-based system that aligns provider incentives with the best health goals for patients has the potential to improve both care experience and outcomes, and mitigate costs for all. the people involved: providers, health plans, patients and employers.

Although the past decade of experimenting with alternative payment models has yielded mixed results, there is cause for optimism. Many have demonstrated improvements for patients and providers, but there’s a growing consensus that it’s time to focus on fewer models and getting them right.

Leaders of health systems and other provider organizations should recognize that the search for value-based, coordinated care is growing among purchasers and adopt financial models that enable it. This means that negotiations on provider payment rates should start from a value-based lens of care, centered on improving quality and keeping care affordable. The examples that follow present elements of value-based care that more health care providers can certainly adopt.

A promising example is direct primary care, which eliminates fee-for-service payments and patient cost sharing by instituting monthly payments to patient care providers, often resulting in reduced emergency department visits and hospitalizations. and higher job satisfaction among providers. In other words, direct primary care providers are rewarded, financially and otherwise, when their patients remain healthy and satisfied with their care.

Accountable care organizations hold providers collectively accountable for overall costs, quality of health care, and outcomes for a group of patients. These organizations have been successful, especially when led by primary care physicians. For several years, providers who form physician-led ACOs have realized significant savings through the Medicare Shared Savings Program, including 85% of those who participate in 2020.

Bundled payments, which can be thought of as a one-time payment for an “episode” of care rather than ad hoc payments for services, have helped reduce cancer care costs for more than a decade. And now they are often used for surgical procedures. This approach rewards providers who effectively deliver higher quality care, often by coordinating patient care with other healthcare professionals. Today’s healthcare landscape would benefit from expanded bundled payment models, as they allow providers to succeed financially through relationships with other specialties. This is not the case in a fee-for-service environment.

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Elaine R. Knight