Reforming Medicare Payments to Improve Quality and Reward Efficiency

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<p>As the single largest payer for health services in the United States, Medicare is in a unique position to provide a model of innovation for the nation. In addition, as the baby boom population ages and health care costs continue to grow, Medicare faces enormous budgetary pressures. To best serve elderly and disabled beneficiaries and prove itself as a leader in achieving high performance, Medicare must align financial incentives with the dual goals of improving health care quality and efficiency.<br /><br />A new <a href="/cnlib/pub/enews_clickthrough.htm?enews_item_id=29685&return_url=http%3A%2F%2Fwww%2Ecommonwealthfund%2Eorg%2Fpublications%2Fpublications%5Fshow%2Ehtm%3Fdoc%5Fid%3D519723%26%23doc519723">article</a> in <em>Milbank Quarterly</em> by The Commonwealth Fund's Karen Davis, Ph.D., and Stuart Guterman describes the adverse incentives inherent in the current Medicare system--resulting in wide variations in costs and lack of coordination in the provision of care--and lays the groundwork for fundamental payment reform that would reward quality and efficiency rather than volume and complexity.<br /><br />"A blended payment system based on both fee-for-service, which rewards productivity, and population or episode case rate payments, which reward the prudent use of resources, would go a long way to rewarding the results we would like to achieve and narrow the current wide, and unacceptable, variations in both quality and efficiency," the authors conclude.</p>