Making Payment Reform Possible

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Any discussion of reforming the way we pay health care providers raises a fundamental question: What do we want out of our health system?

Most of us want a health system that offers the best possible outcomes at an affordable price. But in a new column, Commonwealth Fund president Karen Davis observes that our current fee-for-service system reimburses "inputs" — hospital stays, physician visits, and procedures — rather than the most appropriate care over an episode of illness or over the course of a year.

Davis points out that many experts, as well as those delivering health care services, support a change in the payment system. One possible approach she explores is blended payments, in which payment for hospitals and physicians includes fee-for-service payments, per-patient payments, and performance bonuses. This kind of reform could encourage hospitals to provide transitional care to reduce the risk of rehospitalizations, and physician practices to set up their offices as medical homes.

"We must start testing different approaches now to begin to rein in costs — and to make sure we are paying for the best available care, not just more services," Davis writes.