Content area
Full text
Providers would be better able to reduce costs and improve quality under episode-of-care and comprehensive care payment systems.
ABSTRACT:
Payment systems for health care today are based on rewarding volume, not value for the money spent. Two proposed methods of payment, "episode-of-care payment" and "comprehensive care payment" (condition-adjusted capitation), could facilitate higher quality and lower cost by avoiding the problems of both fee-for-service payment and traditional capitation. The most appropriate payment systems for different types of patient conditions and some methods of addressing design and implementation issues are discussed. Although the new payment systems are desirable, many providers are not organized to accept or use them, so transitional approaches such as "virtual bundling," described in this paper, will be needed. [Health Aff (Millwood). 2009;28(5):1418-28; 10.1377/hlthaff.28.5.1418]
SERIOUS PROBLEMS EXIST WITH THE QUALITY and cost of health care today. One major cause of these problems is that current payment systems encourage volume-driven care, rather than value -driven care. Physicians, hospitals, and other providers gain increased revenues and profits by delivering more services to more people, fueling inflation in health care costs without any corresponding improvement in outcomes. Moreover, current payment systems often penalize providers financially for keeping people healthy, reducing errors and complications, and avoiding unnecessary care.1 Fortunately, alternative payment systems exist that encourage both higher quality and lower costs by giving providers greater responsibility for the factors driving health care costs.
Factors Driving Health Care Costs
Total per capita health care costs are driven by five principal factors: the prevalence of health conditions in the population (for example, how many people have heart disease); the number of "episodes of care" they require per condition (for example, how many heart attacks a person with heart disease has); the number and types of health care services a person receives in each episode (for example, when a person has a heart attack, does he or she receive coronary artery bypass graft (CABG) surgery, a stent, angioplasty, or simply medical management?); the number and types of processes, devices, and drugs involved in each service (for example, the type of stent the heart attack patient receives); and finally, the prices of each of those individual processes, devices, and drugs (Exhibit 1). Each of these factors is affected differendy by different...