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Clinical integration knowledge hub

Learn about the importance of implementing a successful clinical integration strategy, along with some obstacles to avoid along the way.

New payment models & the cost of care

As health care reform continues to evolve, one thing is certain: Health care organizations will be expected to participate in efforts to control the cost of care. And those efforts require those entities to shift from fee-for-service (FFS) reimbursement to value-based models of payment. This is because policymakers are taking a close look at payment reform as a means to control the cost of care while promoting greater collaboration across the health care continuum.

For example, the Medicare Payment Advisory Commission’s (MedPAC) 2008 Report to Congress recommended replacing the current Medicare fee-for-service system with one that “would pay for care that spans across provider types and time… and would hold providers accountable for the quality of care and the resources used to provide it.”1 MedPAC suggested three approaches to help achieve these goals: 1) medical homes, 2) bundled payments, and 3) accountable care organizations (ACOs).

The U.S. Department of Health and Human Services (HHS) recently released new rules under the Affordable Care Act (ACA) to encourage doctors, hospitals and other providers to form ACOs. These organizations provide a framework for rewarding providers—in both the public and private sectors—for tacking actions to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

As payment reform unfolds, health care entities must prepare to take on increasing amounts of financial risk to help improve outcomes and reduce the cost of care. The American Medical Association (AMA) points out that medical groups and health care organizations “will need to participate in systems requiring more communication, care coordination and quality measurement reporting.”2 Examples of those systems or programs have been offered by both the Centers for Medicare & Medicaid Services (CMS) and private payers, who are implementing new payment models in the form of pay for coordination, Pay-for-Performance (P4P), episode or bundled payment, and comprehensive care or total cost of care payment. The ultimate goal for any of these new programs is to improve quality outcomes through care coordination while controlling the cost of care.

As health care organizations consider creating or joining an ACO, many realize that the process of addresses those capabilities needed to thrive in a post-reform environment. Clinical integration is an important first step, as it helps organizations align behavior to improve outcomes, control the cost of care and improve the physician-partnering experience.

Health entities should also pay attention to developing and participating in information-sharing platforms across different systems. These kinds of platforms can help an organization track compliance and performance against quality goals and published guidelines, a necessity with the implementation of value-based reimbursement programs.


1 The Advisory Board Company. 2011. The High-Performance Medical Group: From Aggregations of Employed Practices to an Integrated Clinical Enterprise.

2 American Medical Association. Accountable care organizations. Available at: http://www.ama-assn.org/ama/pub/physician-resources/practice-management-center/practice-operations/business-models/accountable-care-organizations.page.

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