From the Editor-In-Chief Health AffairsVol. 31, No. 9: Payment Reform To Achieve Better Health Care Payment Reform: Parlous, And Yet Still PromisingSusan DentzerPUBLISHED:September 2012Free Accesshttps://doi.org/10.1377/hlthaff.2012.0882AboutSectionsView PDFPermissions ShareShare onFacebookTwitterLinked InRedditEmail ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsDownload Exhibits TOPICSPaymentFee-for-servicePatient-centered medical homesCosts and spendingPhysician paymentMedicareHealth care providersBundled chargesValue-Based Purchasing This issue of Health Affairs on payment reform has a hoary pedigree, given the years of thought devoted to economic incentives in health care. The British literary giant George Bernard Shaw long ago grasped the dubious effects of fee-for-service medicine: In the preface to his 1909 play The Doctor’s Dilemma , he lamented the payment norm that gave “a surgeon a pecuniary interest in cutting off your leg…and the more appalling the mutilation, the more the mutilator is paid.” The Hoover-era Committee on the Costs of Medical Care also partly blamed fee-for-service for that era’s health cost spiral. The panel suggested “group payment” of physicians as an alternative, but in a nod to political realities, also contended that “those who prefer the present method” of payment should be able to keep what they had.Paying For The BestFast forward to the present, when in a modern-day twist on Diogenes, we still search for an honest way to pay health care providers to elicit and reward their best work. By “best,” we more or less mean the “Triple Aim”: We want them to provide better health care, advance the population’s health, and, ideally, to make it all cost less.So as the nation edges glacially away from fee-for-service payment, health systems, plans, and programs are adopting the slew of arrangements detailed in this issue: bundled payment, value-based purchasing, pay-for-performance, patient-centered medical homes, “shared savings,” global budgets, “partial” or “full” capitation, and anything else we can invent or recycle from the past. Meanwhile, Paul Ginsburg reminds us that many payment innovations will still be based on fee-for-service, and that multiple problematic aspects of Medicare payment to doctors will thus need to be fixed.Early SuccessesThe good news is that there’s plenty to be excited about, as the “Innovation Profiles” in this issue make clear. Many employ payment reforms to drive changes in the delivery system, such as various medical home pilots described herein. They appear to show that paying a team of primary care providers in new ways—not to mention paying them more—results in more active management of chronically ill patients that leads, among other outcomes, to far less use of costly hospitalization.Thomas Claffey and coauthors describe the partnership between Aetna and NovaHealth, an independent physician association in Maine whose medical home–like model for Medicare Advantage patients led to a sharp cut in hospital use even as performance on key quality metrics remained high. And as Ruth Raskas and colleagues detail, the insurer WellPoint has reaped sufficiently positive results on its medical home pilots that it is now applying the strategy in its markets in 14 states.Yet a consistent theme in this issue is that payment reform, although necessary to system transformation, is hardly sufficient. Robert Mechanic and Darren Zinner discuss their survey showing that even many large multispecialty medical groups lack the information systems or skills to move fully into shared risk or capitated arrangements. Similarly, Urvashi Patel and coauthors report that Horizon Healthcare Services, Inc., in New Jersey discovered that primary care practices in its medical home pilot needed plenty of additional support, including tools that enabled them to create detailed care plans and track patients’ needs.Back To The FutureThis issue is also packed with examples of payment reforms of today or yesteryear that have proved flawed or lacking in some way. Stuart Altman reexamines the nearly 30-year history of Medicare’s prospective payment system for hospital inpatient care and sifts the lessons for Medicare’s recently implemented bundled payment initiative. A powerful one is that Medicare, as mighty as it is, can as a payer only move the needle so far—and that unless private insurers implement similar reforms, providers will rationally try to maintain their incomes by charging those insurers more.A related issue is how large financial carrots and sticks have to be to motivate large changes in providers’ behavior. Rachel Werner and Adams Dudley evaluate the Medicare value-based purchasing program for hospitals scheduled to go into effect in October 2012. They find that neither its bonuses nor its penalties are likely to be big enough to make much difference. We are deeply grateful to WellPoint and its executive vice president and chief medical officer Sam Nussbaum, and to the California HealthCare Foundation, for financial support of this issue. We also thank James Robinson, former editor-in-chief of Health Affairs , who served as thematic issue adviser. Loading Comments... Please enable JavaScript to view the comments powered by Disqus. DetailsExhibitsReferencesRelated Article Metrics History Published online 1 September 2012 Information Project HOPE—The People-to-People Health Foundation, Inc. PDF download