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Paying for Care Episodes and Care Coordination


The fee-for-service (FFS) payment system—in which doctors and other providers are paid set amounts for specific services rendered—is increasingly seen as a barrier to effective, coordinated, and efficient care, writes Commonwealth Fund President Karen Davis, Ph.D., in an editorial in the New England Journal of Medicine.

According to Davis, FFS rewards the overuse and duplication of services, as well as costly, specialized treatment. Moreover, it does not reward providers for keeping patients from being hospitalized, or rehospitalized, or for helping patients control and monitor their chronic conditions.

In exploring alternatives to FFS, Davis examines approaches that base payment on the total care a patient receives during an episode of illness or a defined period. Creating a global fee for "care episodes," with adjustments made for case-mix complexity, could reward providers who have lower costs.

Another option that could lower costs and improve care is basing payment around the concept of a "medical home," in which patients receive accessible, continuous, and coordinated care from a physician or practice. Studies have found that having a regular source of care and continuous care are associated with better health outcomes and lower total costs. Alternatively, when patients are cared for by many physicians, costs are higher and rates of medical errors are greater.

Extensive evaluations of these new methods are vital, Davis says, to help providers and patients move toward a more rational payment system that rewards coordination and efficiency, while slowing the escalating costs of health care.

Click here for free access to the complete editorial.

Publication Details



K. Davis, Paying for Care Episodes and Care Coordination, New England Journal of Medicine, March 15, 2007, 356(11):1166-68