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Rand on Payment Reform Methods

By March 1, 2011Commentary

While a variety of provider payment types have been introduced over the past few decades, such as the DRG system used for compensating hospitals, fee-for-service models still dominate, particularly for physicians.  This method has come under intensive criticism for creating incentives for wasteful and inappropriate care, driving up costs and potentially lowering quality.  In the context of the reform debate, many new payment mechanisms have been proposed and are being piloted or implemented.  A Rand report examines these proposals for payment reform and the measures needed to utilize them successfully.  (Rand Report)

The models looked at include global payments, bundled payments, medical homes, payments to physicians and hospitals for performance, and payments for shared decision-making.  These models share common objectives of providing incentives to reduce unnecessary care, improve quality and coordinate care.  They also must include quality measures needed to ensure that the new payment mechanisms don’t result in skimping on necessary care, such as the clinical and sociodemographic risk profiles of patients and evaluation of access to care and provider avoidance of high-risk patients.  Overall the authors say performance measures should focus on longitudinal care processes, not evaluation of specific instances of care.  They also believe that measure development is need to assess health outcomes across a population, for care care coordination and transitions, and to evaluate patient and provider engagement.

One thing that the report is a little short on is a discussion of the systems that are needed to capture data and provide near-instantaneous feedback to physicians on how they are doing both from a financial and quality measurement perspective.  Too often in the past, doctors haven’t had a clue where they stood in either regard until well past the period covered by the payment.  If they are to be successful under the new payment models, they need to have constant and easy access to this information.  Overall the report is an excellent catalog of payment reform models.

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