No one quite knows what the ultimate result of healthcare payment reform will be, but it seems clear that the industry will gradually move away from the long-dominant fee-for-service model. Rather than motivating and encouraging care coordination, patient engagement and quality, the fee-for-service model rewards volume. As a result, there is no market for a combination of quality outcomes and cost-effective health care – only one that pays for tests and procedures.
Unless the market shifts, costs for medical services will continue to rise and, as they do, it’s expected that payers, employers and patients will pay higher prices for less.
While government initiatives such as the Physician Quality Reporting System (PQRS) and the Meaningful Use program are a step in the right direction, quality is only one variable in the health reform equation. Cost control and outcomes measurement are notably missing from these penalty- or bonus-based programs.
However, the introduction of the Accountable Care Organization (ACO) model marks the next step in the evolution of health care payment reform and government reimbursement. The ACO model includes a risk basis for payment, and a focus on population health and care coordination that brings the industry closer to value-based payment.
In addition, over the next few years, the CMS Innovation Center will introduce a number of other health care payment reforms, such as bundled payment, pay-for-performance pilot programs and reduced Medicare payments for physicians not participating in PQRS.
Private payers are also highly motivated to cut health care costs because they are responsible for treatment costs not covered by government programs or paid for directly by patients. They are attempting a variety of health care payment reforms, none of which are likely to emerge as the dominant model but which serve, nevertheless, as steps along the way to the ultimate shape of payment reform.
For example, more than 25 health plans now incorporate Patient-Centered Medical Home (PCMH) recognition into their own programs, and many will offer financial incentives to practices that adopt the medical home model.
The industry is experiencing only the tip of the iceberg today. Ultimately, health care payment reform may change how medical services are administered and reimbursed in ways that will impact every practice in the nation.
