NRHI Payment Reform Series
Thanks to generous support from the Robert Wood Johnson Foundation, NRHI will be issuing a series of reports on issues related to healthcare payment reform.
The newest report in the series is Pay for Innovation or Pay for Standardization: How to Best Support the Patient-Centered Medical Home. The report recommends improved ways in which primary care practices should be paid for delivering services to patients in order to improve health care quality and control costs, ranging from new fees for services such as nurse care managers to help patients manage chronic diseases, to comprehensive payments that would completely replace the fee-for-service system. It also cautions against moving too quickly to require primary care practices to meet detailed accreditation standards in order to receive improved payments, and particularly cautions against establishing requirements that serve as barriers to participation by small physician practices without strong evidence that the requirements improve quality.
The second report in the series was Better Ways to Pay for Health Care: A Primer on Healthcare Payment Reform. The concise report provides an easy-to-understand explanation of the problems with current healthcare systems and describes alternative payment systems that can solve the problems without placing the kinds of restrictions on doctors and patients that doomed many managed care initiatives a decade ago. The report shows how "episode-of-care" payment systems provide the incentives for hospitals and physicians to coordinate their efforts in order to eliminate quality problems and improve efficiencies in care delivery. It also shows how "risk-adjusted global fees" can provide primary care physicians the resources they need to help people with chronic diseases stay well enough to avoid preventable hospitalizations, which is consistent with current national efforts to promote the use of patient-centered medical homes.
The first report in the series was the Executive Summary of the recommendations from the 2008 NRHI Payment Reform Summit. This document makes recommendations for addressing key issues and challenges in order to implement healthcare payment reforms, including:
- The kinds of standards health insurance plans and other payers should demand of primary care practices in order to provide improved payments;
- The number of cost/quality tiers into which providers should be grouped;
- The magnitude of the payment differences for consumers choosing providers in different tiers;
- The reporting requirements providers should be expected to meet in order to protect patients; and
- The types of assistance that hospitals and small physician practices should be given to help transition to new payment systems.
Upcoming reports in the NRHI Payment Reform Series include:
- Creating incentives for consumers to use higher-value providers and services; and
- The important role that regional healthcare collaboratives must play in implementing payment reform.
Recommendations of the 2008 NRHI Payment Reform Summit
A major cause of the quality and cost problems in healthcare today is that payment systems encourage volume-driven healthcare rather than value-driven healthcare. Fortunately, there are better ways to pay for healthcare, called episode-of-care payment systems and condition-specific capitation systems, which give healthcare providers more responsibility for increasing quality and controlling costs of services without penalizing them financially for treating sicker patients.
There are a number of important issues that need to be addressed and a variety of challenges that need to be overcome in order to move these improvements from concept to reality:
- Which healthcare providers are able and willing to accept new payment structures and deliver value-based care?
- How should the use of high-value providers and services be encouraged? What protections are needed to ensure appropriate quality for patients?
- How can payers and providers be encouraged to participate in new payment and delivery systems? How similar do different payers' systems need to be?
- What kinds of pilot projects are needed to test new payment systems?
- What community-wide structures are needed to support payment reform?
The recommendations of more than 100 healthcare leaders from across the country for addressing these issues are described in detail in this report.
Recommendations of the 2007 NRHI Payment Reform Summit
In many cases, current healthcare payment systems don't reward efforts by physicians, hospitals, and others to improve the quality and reduce the costs of health care. In fact, all too often, they actually financially penalize them. This has led to a variety of pay-for-performance ("P4P") programs which add a new layer of rewards and incentives on top of the existing payment systems. While well-intended, there is a growing recognition that most current pay-for-performance initiatives won't by themselves solve the fundamental problems and disincentives that are built into the underlying payment systems.
On March 29, 2007, the Network for Regional Healthcare Improvement convened a one-day, invitation-only national Summit on Creating Payment Systems to Accelerate Value-Driven Health Care in Pittsburgh, Pennsylvania. The Summit was designed to accelerate thinking about how healthcare payment systems can be redesigned to reward improved quality and lower costs. The Summit was not a typical "conference," but rather a working meeting that brought together the people who must collaborate if innovative solutions will ever succeed - major healthcare payers, health plans, regional coalitions, researchers, and other thought leaders. Attendance included nearly 100 regional and national leaders from around the country who are working at the frontier of these issues.
This report describes the recommendations of the Summit participants regarding the types of payment systems that should be implemented in order to improve the quality and reduce the costs of healthcare.
Issues and Options in Payment Reform
This report is designed to assist healthcare payers and policymakers to restructure payment systems in ways that will improve the quality of health care and reduce (or slow the growth in) the costs of health care. Drawing on the research and proposals of many researchers and practitioners, it summarizes the key concepts involved in any discussion of ways to restructure payment systems; catalogs the quality and cost problems that current payment systems create; lists the key concerns that have been raised about pay-for-performance systems in health care; proposes 12 goals that revised payment systems should seek to achieve in order to effectively address the problems; defines the specific issues that need to be resolved in order to achieve these goals; describes the primary options for addressing each of these issues; and suggests a general strategy for making progress on payment restructuring.
Overview of Regional Collaboratives
Regional healthcare collaboratives are helping to drive the agenda for transformation of the U.S. healthcare system by bringing together health care payers, health care plans, health care providers, and users of healthcare in collaborative efforts to improve the health care systems in their regions. Regional healthcare improvement organizations mobilize community resources to solve key problems where markets fail to promote the continuous creation of higher value through improved quality and access at lower cost. By facilitating participation by and support from providers, insurers, employers, unions, consumer groups, and government agencies, these organizations are able to effect solutions that no market participant could achieve individually.
This report from NRHI describes the five areas of activity in which regional healthcare collaboratives engage.