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.

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.

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.