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CCH® BENEFITS — 10/16/07

Commonwealth Fund Recommends Revised Payment Strategies To Improve Health Care Quality And Cut Costs

From Spencer's Benefits Reports: The Commonwealth Fund has introduced some restructured payment strategies to help improve the quality of health care and contain costs. The paper, Creating Payment Systems to Accelerate Value-Driven Health Care: Issues and Options for Policy Reform, points out that providers are not adequately compensated for keeping patients healthy or for ensuring that they follow up with patients after hospital discharge or for monitoring patient compliance with their treatments. Instead, the existing payment system rewards medical providers for volume of services and results in uncoordinated and duplicative care from multiple, different providers, the study observed.

Furthermore, patients lack financial incentives to adhere to preventive care and disease management recommendations, and instead face copayments and deductibles that might discourage them from obtaining these desirable services. In addition, at least currently, payers have no way to steer patients to higher-value providers, providing high-quality care and avoiding preventable conditions and complications.

“One reason for high costs and quality gaps is that current health care payment systems impose significant financial penalties and offer disincentives to providers (hospitals, physicians, and others) who supply quality, efficient care (e.g., lower-cost services, higher-quality care, cognitive services, preventive care, etc.); while they offer significant incentives for providing expensive, inefficient care (e.g., invasive treatment, use of technology, etc.), irrespective of outcomes,” the Commonwealth Fund noted.

12 Goals

The Commonwealth Fund paper recommends that revised payment systems should strive to achieve the following 12 potential goals:

  1. Enable and encourage providers to deliver scientifically proven treatments to patients in a high-quality, efficient, and patient-centered manner.
  2. Support and encourage providers to invest, innovate, and take other actions that lead to improvements in efficiency, quality, and patient outcomes and/or reduced costs.
  3. Avoid encouraging or rewarding over-treatment, use of unnecessarily expensive services, unnecessary hospitalization or rehospitalization, provision of services with poor patient outcomes, inefficient service delivery, or choices about preference-sensitive services that are not compatible with patient desires.
  4. Avoid rewarding providers for under-treatment of patients or for the exclusion of patients with serious conditions or multiple risk factors.
  5. Avoid rewarding provider errors or adverse events.
  6. Make providers responsible for quality and costs within their control, but not for quality or costs outside of their control.
  7. Support and encourage coordination of care among multiple providers, and discourage providers from shifting costs to other providers without explicit agreements to do so.
  8. Encourage patient choices that improve adherence to recommended care processes, improve outcomes, and reduce the costs of care.
  9. Avoid rewarding short-term cost reductions at the expense of long-term cost reductions, and not increase indirect costs in order to reduce direct costs.
  10. Avoid encouraging providers to reduce costs for one payer by increasing costs for other payers, unless the changes bring payments more in line with costs for both payers.
  11. Minimize the administrative costs for providers in complying with payment system requirements.
  12. Different payers should align their standards and methods of payment in order to avoid unnecessary differences in incentives for providers.

To “improve” payment systems that will achieve these goals, the Commonwealth Fund recommends that a wide variety of payment demonstration projects be developed, implemented, and evaluated at the regional level with regional leadership and national support, and eventually be expanded to the national level.

For more information, visit http://www.commonwealthfund.org.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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