Karen Davis: Sending the Right Signals in the Health Care Marketplace

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<p>The market for health care is not like markets for other goods and services, says Commonwealth Fund President Karen Davis in the first of a <a href="/blog/2010/coherent-and-transparent-health-care-payment-sending-right-signals-marketplace">new series of Fund Blog posts</a> on improving the financing of the U.S. health system. Despite the differences, Davis says, there are ways we can improve the functioning of the health care market and increase the value of what we pay for care.</p>
<p>The Center for Medicare and Medicaid Innovation, created by the Affordable Care Act, will pilot new ways of paying for and delivering health care, including "bundled" methods of payment that encourage providers to work together across health care settings to treat their patients, and approaches that reward providers that offer appropriate, high-quality, and efficient care. In her essay, Davis reviews different ways of paying for coordinated care, including: </p>
<li>global fees, in which each provider organization receives a fixed, per-person payment based on the patient's health condition or a risk-adjusted capitation rate; </li>
<li>bundled acute case rates with a warranty for a given procedure, such as hip replacement surgery or heart bypass surgery; </li>
<li>primary care medical home fees, where the medical home receives either a fee for all primary care or a blended payment comprising both fee-for-service and monthly medical home fees; and </li>
<li>shared savings, available to physician group practices and other accountable health systems that improve that improve quality and reduce costs. </li>
<p>"But changing the method of payment is only one part of the solution," Davis says. "To make it work, new health care organizations that are accountable for both patient outcomes and the resources devoted to care will need to be formed." Future blog posts will explore the promise and pitfalls of these new models of care. <br /></p>