Payment Reform: A Key To Improving Health Care Delivery

Today, the Center for American Progress and the Institute on Medicine as a Profession released The Health Care Delivery System: A Blueprint for Reform, a wonkish compilation of policy recommendations for reforming the health care delivery system.

The book, which assumes the implementation of a national heath care system, transcends popular campaign rhetoric to offer policy makers concrete solutions for transforming the health care system into an organization that places patient care ahead of insurer profit.

The questions are this:

– What specific measures can Congress and the next President adopt to transform the American health care system to promote quality, efficiency, patient-centeredness, coverage and wellness?

– What can we do to build up the health care infrastructure (workers, tools, and knowledge), fix the health organization (in which doctors don’t work as integrated teams to coordinate patient coverage), improve the quality of care, and encourage patient participation in the management of chronic diseases?

The answers, while complex and numerous, all rest, to one extent or another, on payment reform.

Most payment today is fee for service, “meaning that each service a doctor provides is paid for separately.” Doctors are discouraged to refer patients to complimentary providers — undermining coordinated care and holistic treatment initiatives — because it does not affect what they receive for their services. The more services doctors provide, the higher their compensation, and high-quality services are not compensated any more that poor quality services. Our payment system rewards action, not health management.


Moreover, Medicare reimburses specialists at a higher rate than primary care physicians and the number of family doctors is plummeting. Solo doctors don’t have a monetary incentive to treat patients in an efficient and holistic manner and in some cases even lose money. Doctors don’t have a financial incentive to adopt electronic records because using paper files allows them to perform more procedures and receive greater compensation. Why eliminate profitable redundancy?

The financial incentives are plain backwards. The current payment system discourages the kind of organization that values patient well-being above physician or insurer profit. To that end, the blueprint for reform recommends a better alignment between payment and outcome and a system that more accurately reflect relative costs of providing different services.

To read the entire blueprint, click here. Today, CAP also hosted an event on the blueprint featuring prominent health care experts. Find out more here.