Innovative programs, such as tying the payment system to the delivery system, could help bend the healthcare cost curve, according to Karen Davis, president of the Commonwealth Fund.
Speaking in March at the 5th Annual National Pay for Performance Summit in San Francisco, Davis highlighted more than a dozen collaborative efforts around the country, illustrating what she called "a sense of richness out there."
"We are on a path of continued payment reform," she said, noting that the healthcare industry is moving away from a fee-for-service model to a bundled payment model. The emerging payment models are expanding beyond pay for performance.
Davis credited the multi-stakeholder, nonprofit Integrated Healthcare Association as an early pioneer in innovative programs. She also highlighted payment reform projects initiated by organizations like Bridges to Excellence and the Minnesota-based Institute for Clinical Systems Improvement.
The Centers for Medicare & Medicaid Services and the Premier healthcare alliance have collaborated on the Hospital Quality Incentive Demonstration, Davis noted. CMS extended the project to test the effectiveness of new incentive models and find innovative ways to improve patient care.
Davis highlighted a handful of patient-centered medical homes, including those at the Group Health Cooperative and the Geisinger Health System. The Commonwealth Fund, Qualis Health and the MacColl Institute for Healthcare Innovation are collaborating on a national initiative to transform safety-net clinics into PCMHs, she said. Meanwhile, Oklahoma is revamping its state Medicaid program into a PCMH model.
States are taking the lead with various projects, Davis said. The Vermont Blueprint for Health collects funds from commercial payers to pay providers. The Rhode Island Chronic Care Sustainability Initiative is a multi-year pilot of a PCMH.
Under MassHealth, Massachusetts' Medicaid and commercial payers are collaborating on a global fee strategy, while Blue Cross Blue Shield of Massachusetts has developed an Alternative Quality Contract, which includes global payment and bonuses for quality.
The real challenge for the future, said Davis, is trying to harmonize private and public provider payment and move toward a rational payment system.
James Robinson, Kaiser Permanente Professor of Health Economics at UC Berkeley's School of Public Health, says episode payments – case rates for major acute interventions and chronic conditions – are the best approach for payment reform.
Global capitation burdens providers with too much risk, and pay for performance – if focused on quality only – doesn't necessarily help with cost, said Robinson. While fee-for-service rewards volume, it can be useful "around the edges" of episodes and case rates, he said.
"Episode payment must be conceptualized as a means to expand, not restrict, the organizational and geographic scope of the market," Robinson said.
He dismisses fears of too little or too much consumer choice. "Episode payment for providers requires last dollar rather than first dollar cost sharing for patients," he said, noting that the effect brings down premiums.
Unfortunately, most public policy and regulation impedes a transition to episode payment, Robinson said.