A New Way to Pay Medicare Providers and Improve Performance

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In a Web Exclusive article published today by Health Affairs, experts at The Commonwealth Fund unveiled a new framework for revising the Medicare program's provider payment system to "slow Medicare's cost growth, improve the value for the dollars it spends, and serve as a model for broader health system change."

At the core of the proposal, developed by the Fund's Stuart Guterman, Karen Davis, and Stephen C. Schoenbaum, M.D., and IPRO's Anthony Shih, M.D., is an array of bundled payment options for physician group practices, hospitals, and health systems, with incentives to encourage greater integration in health care delivery and greater coordination of beneficiaries' care.

Under the plan, qualified physician practices, for example, would receive a monthly risk-adjusted per patient global fee to cover all primary care services, with part of the amount covering the services associated with a patient-centered medical home. An integrated system, meanwhile, could be paid a global payment per enrollee to cover all Medicare services, including inpatient and post-acute care, ambulatory care, and prescription drugs.

"We face great peril if our health system continues on our current course of high cost and suboptimal performance," write the authors. By using payment incentives, they say, Medicare — the nation's largest health care payer — "could lead the nation to higher health system performance and yield great benefits for individuals, providers, and society as a whole."