Can billing based on “value” save money and improve care?
Health care spending continues to rise in the United States, consuming nearly 18 percent of gross domestic product in 2014—a trajectory that many experts warn is unsustainable. Some say the traditional “fee-for-service” system of reimbursing doctors and hospitals for each service rendered wastes money and even harms patients because it lacks adequate incentives to ensure quality care. A growing number of insurers and employers agree. Led by the federal Medicare program, they are aggressively pursuing alternative models designed to rein in spending and improve care by basing payment partly on “value” and “quality.” In 2014 Medicare made 20 percent of its payments using alternative payment models, up from zero in 2011, and it wants to increase that to 50 percent in 2018. Defenders of the fee-for-service approach, however, question whether payment based on value is workable and cost-effective. Among the issues under debate: Can health care providers operate profitably under new payment systems? Do new systems reward quality care better than fee for service? Can hospitals and doctors measure what matters?
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The Next Step
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Center for Healthcare Value
3333 California St., Suite 265, Box 0936, San Francisco, CA 94118
A University of California, San Francisco, program that researches health delivery systems and health policy; also trains physicians how to create value.
Center for Medicare and Medicaid Innovation
7500 Security Blvd., Baltimore, MD 21244
Federal agency working with providers on new payment and delivery models for Medicare and Medicaid.
Health Care Payment Learning and Action Network
7500 Security Blvd., Baltimore, MD 21244
A group begun by the Department of Health and Human Services that brings together private, public and nonprofit sectors to explore how to move to value-based care and alternative payment models.
Health Care Transformation Task Force
601 New Jersey Ave., N.W., Suite 450, Washington, DC 20001
Industry consortium formed in 2015 with large payers, patients, providers and purchasing groups that has committed to 75 percent value-based purchasing by 2020.
Oregon Health Transformation Center
421 SW Oak St., Suite 775, Portland, OR 97204
A branch of the Oregon Health Authority working with Coordinated Care Organizations to lower costs and increase quality for Oregon's Medicaid recipients.
Pacific Business Group on Health
575 Market St., Suite 600, San Francisco, CA 94105
Not-for-profit group representing 60 large health care purchasers, whose members share ideas as well as work on innovations in the payment and delivery processes for their employees.