Health Care Payment Reform That Rewards Value, Not Volume

In a recent groundbreaking report, the Commonwealth Fund Commission on a High Performance Health System recommended an integrated set of reforms for changing the way the nation pays for health care—to reward high-quality care and encourage a more rational, efficient care delivery system. In a new report, Reforming Provider Payment: Essential Building Block for Health Reform, Fund researchers describe in greater detail the Commission's proposals for payment reform, how they might be applied, and what their impact could be if implemented on a foundation of universal health coverage and other system reforms.

The Commission-recommended payment reforms seek to:

• strengthen primary care by enhancing Medicare payment for services and ensuring annual increases that keep pace with the cost of efficient practice
• encourage adoption of the medical home model and promote more accessible, coordinated, patient-centered care, with a focus on health and disease prevention
• promote more effective, efficient, and integrated care delivery through "bundled payment" approaches that reimburse providers for care delivered over a period of time or for the duration of an illness, with rewards for quality, outcomes, and efficiency
• correct price signals in health care markets to align payments with value.

The report shows that by increasing emphasis on primary care, improving coordination, and eliminating unnecessary and duplicative services, specific policies based on the Commission's recommendations could slow growth in total health care spending by a cumulative $1 trillion through 2020, compared with projections under current policies. This represents one-third of the overall system savings of $3 trillion projected for the Commission's integrated set of health care reform recommendations.

"While embarking on payment reform may be daunting for stakeholders, new and innovative strategies are needed to align incentives to encourage and reward more effective and efficient care," the authors say. "The goal is to improve the performance of the health system for those it is intended to serve, while making the system more sustainable for all those who provide, receive, and pay for care."