A Better Way to Pay Health Care Providers?

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The flaws in the ways we currently pay health care providers in the U.S. are well known. While the traditional fee-for-service system has contributed to the rapid rise in health care costs and insurance premiums, capitation payment systems have often set the payments too low and put providers at unfair financial risk.

In a report published today by The Commonwealth Fund, researchers describe a promising new payment model that might address these failings while also improving health care quality, lowering administrative burden, enhancing transparency, and supporting a patient-centered, consumer-driven environment.

Developed by the nonprofit Prometheus Payment, the model is based on the "evidence-informed case rate" — a single, risk-adjusted payment given to providers across health care settings to care for a patient diagnosed with a specific condition, like colon cancer, or for a specific procedure, like knee replacement. Payment amounts are based on the resources required to provide care as recommended in the best available clinical guidelines.

To further promote quality care, the Prometheus model calls for a portion of the payment to be withheld and distributed according to various performance measures.

Read the report to learn more about how the new payment model works, how evidence-informed case rates are developed, and what the plans are to test this new payment model.