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Getting from Here to There in Payment Reform: Necessary Practices and Policies

Successful health reform hinges not only on improving coverage and access to care, but also on delivery system and payment reform, argue The Commonwealth Fund’s Stuart Guterman and Stephen C. Schoenbaum, M.D., M.P.H., in the Journal of Ambulatory Care Management. In this article, the authors urge that the various payment initiatives being discussed in the context of health reform should be considered together.

These initiatives boil down into two distinct dimensions, the authors say: a move toward “bundled payment” and a system of performance rewards (commonly referred to as pay-for-performance). These two dimensions of payment reform have different objectives: the principal objective of bundled payment is to stimulate more efficient use of resources, while the principal objective of pay-for-performance is to ensure or enhance quality of care and, ultimately, to achieve better outcomes. The authors propose that linking rewards for greater efficiency with rewards for improved quality can provide an appropriate balance between those objectives.

In moving toward bundled payment, the authors suggest that providers be encouraged to accept responsibility for the effectiveness and efficiency of care. Incentives could include more favorable payment for providers who take on greater responsibility, as well as disincentives to make the fee-for-service system less appealing. Pay-for-performance initiatives—the other side of the equation—not only reward high-quality care but also send a message to health care providers to focus on quality, not volume or intensity.

Finally, the authors contend that Medicare should be given the authority to develop, test, and implement new payment schemes. National and state policies to initiate payment reforms, the authors conclude, are an essential component of overhauling the health system and moving the United States toward high performance.


Publication Details



S. Guterman and S. C. Schoenbaum, “Getting from Here to There in Payment Reform: Necessary Practices and Policies,” Journal of Ambulatory Care Management, Jan./Mar. 2010 33(1):52–57.