Emerging models for payment reform, Part 1
Episode-based payments

Emerging models for payment reform, Part 2

Today’s post will continue exploring emerging models for payment reform through an excellent summary paper [scroll to p.9] by M. Rosenthal in the New England Journal of Medicine (“Beyond Pay-for-Performance – Emerging Models of Provider-Payment Reform”, September 2008).

She lists the following models at various stages of development (as of her writing in 2008):

  • Incremental reform: non-payment for avoidable complication (surgery on the wrong body part or catheter-associated urinary tract infections, for instance) – currently in use.
  • Primary care payment reform
    1. Tiered case-management fees in addition to fees for service, paid per patient per month to practices demonstrating “medical homes” characteristics (a setup with more low-level interactions with patients designed for the primary care physician to take more responsibility in integrating the care of the patient) and including performance fees – pilot under development
    2. Primary care capitation with performance incentives – pilot under development.
  • Episode-based payment reform
    1. Episode-based payment model that defines global case rates for given clinical conditions, with a comprehensive score card, risk stratification and complication allowance – Prometheus, pilot under development.
    2. 90-day global fee paired with high-reliability process improvements to achieve 40 best-practice standards – in use now.
  • Shared savings
    1. Bonus for demonstrating slower growth in spending for patient care relative to peers, quality of performance affects share of savings – in use now
    2. Primary care physicians eligible to share in savings according to their performance on use of generics, emergency room visits and other criteria – in use now.

Common themes to these models include:

  • Value-based payments, driven by cost control as well as adherence to clinical guidelines and quality measures
  • The need to distinguish random variations in outcomes and patient mix from variation in practices and avoidable complications.
  • Connections between payment models and specific care delivery and organizational models (e.g., shared-savings models and large, integrated healthcare systems.)
Rosenthal also points out the importance of political factors in advancing or hindering reform, since the goals of the new payments models are to slow spending growth and move care from intensive (expensive) settings to less intensive (less expensive) ones.


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