October 2014 | Payment Reform
Thursday, October 9, 2014
Payment Reform

Health care payment reform is critical to employers and other health care purchasers looking to contain health care costs and get greater value for their spending. The current fee-for-service model can encourage unnecessary care, driving up costs as we pay for the volume of care instead of its value. Reforms aimed at the payment side of health care can cut waste and improve quality by changing providers’ incentive structure. At the same time, we need to focus on aligning incentives across consumers, health care providers, health care payers, and health care purchasers, which often requires pairing payment reforms with benefit and network designs that give consumers motivation to seek higher-value care.

Payment Reform Pioneers Deliver on Value

Health care providers are increasingly being paid based on the value of the services they provide instead of the quantity, in the hopes of both improving quality and controlling costs. Aligning Forces for Quality Alliances have worked with physicians, hospitals, insurers, employers, and other stakeholders to develop and implement systems to measure and publicly report performance.

Journalist Bruce Japsen examines how hospitals and health systems participating in the Wisconsin Collaborative for Healthcare Quality have embraced new payment systems that reward high-value care—with one accountable care organization reducing costs for Medicare beneficiaries by 4.6 percent. This is part of "Journalists on Quality," a series on how AF4Q is transforming care in communities.

First Steps in Engaging Employers in Innovative Payment Strategies
Since 2010, the Wisconsin Collaborative for Healthcare Quality (WCHQ) and the Partnership for Healthcare Payment Reform (PHPR) have worked with other organizations in Wisconsin to support providers and health plans in experimenting with innovative payment models. PHPR created two pilot projects: a bundled payment for total knee replacement and a shared savings project for adults living with diabetes.
When uptake of the pilot projects was slower than expected, the Alliance asked: What keeps employers from participating in initiatives that are designed to deliver better value for their health care investments? Although no one-size-fits-all solution was found, multi-stakeholder organizations can take several steps to communicate more effectively and reach receptive employers about such initiatives.
The Power of Partnership in Achieving Payment Reform Sustainability

The Aligning Forces for Quality New Mexico Alliance, along with New Mexico’s state Medicaid office and other state leaders, provides an interesting example of how the public and private sector can work together to test an innovative payment reform model. The bundled payment pilot project began in 2014.

The work toward this pilot project began in January 2012, when the New Mexico Alliance and stakeholders held a two-day "Payment Reform Summit" attended by more than 70 stakeholders including employers, health plans, medical group executives, consumer advocates, and hospital leaders. Then, in February 2012, the New Mexico Alliance hosted a "Consumer-to-Consumer" Summit to share the Alliance's projects and goals with residents, as well as learn ways to better incorporate the consumer perspective into its projects.

Aligning Forces for Quality (AF4Q) is the Robert Wood Johnson Foundation’s (RWJF) signature effort to lift the overall quality of health care in targeted communities, reduce racial and ethnic disparities in health care and provide models for national reform. Alliance teams represent the people who get care, give care, and pay for care.
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