Innovation > Payment Reform in Health Care
Payment reform means moving away from the dominant payment model in the United States — fee-for-service. Fee-for-service is inherently inflationary. Fee-for-service payment offers health care providers a specific amount of compensation in exchange for providing a patient with a specific service (e.g., visits, tests, procedures).
Because care providers can charge a fee for each procedure, the more procedures they perform, the more money they will be paid. In the end, fee-for-service pays for volume, not outcome. In a fee-for-service environment, physicians get paid the same amount for one patient, regardless of whether they provide excellent care or terrible care. In fact, providers may actually be paid more for poor quality due to the need for “rework.”
If fee-for-service is the problem, what is the solution? Health care providers need to be rewarded for providing high-quality, efficient care, resulting in optimal health outcomes through the way they are paid. Many different payment approaches are currently being tested; they include:
Payment reform is not an end in itself. It is a means to spark fundamental change in the health care system. In 2012, the Action Group received a grant from the Robert Wood Johnson Foundation to explore what employers currently know about payment reform and how they might more actively work to change how we pay for health care in the United States and in Minnesota.
Although hospitals, physicians, and health plans have begun to reform how care is paid for in Minnesota, employers, public agencies, and individual consumers/patients have a vested interest in learning about the changes taking place, what other options might be considered, and to advocate for an accelerated pace of change in a manner that benefits the real payers. Click here to see presentations from these workshops.