the value obtained for the resources expended. These goals are relevant regardless of whether care is delivered in a predominantly competitive or regulated environment, and whether the ultimate purchaser is an employer or the patient/ consumer. Payment policies should not create barriers to improving the quality of care.

Recommendation 10: Private and public purchasers should examine their current payment methods to remove barriers that currently impede quality improvement, and to build in stronger incentives for quality enhancement.

Although some purchasers are pursuing payment approaches that include rewards for quality, all existing payment methods could be modified to create stronger incentives for quality improvement. Purchasers should identify ways to (1) recognize quality, (2) reward quality, and (3) support quality improvement. For example, quality could be recognized by developing better quality measures and making their results more broadly available to covered populations, whether through new forms of information or improvements in the ways existing information is shared. Quality could be rewarded by using direct payment mechanisms or by redirecting volume to health plans and providers recognized for providing high-quality care by offering stronger incentives for people to seek out better quality care (e.g., adjustments to out-of-pocket costs). Quality improvement could be supported by exploring the potential for shared-risk arrangements that could encourage making significant changes in care processes to improve quality. Although more fundamental change may be required in the long run, immediate improvements can and should be pursued.

Recommendation 11: The Health Care Financing Administration and the Agency for Healthcare Research and Quality, with input from private payers, health care organizations, and clinicians, should develop a research agenda to identify, pilot test, and evaluate various options for better aligning current payment methods with quality improvement goals.

Although most payment methods have an objective of cost containment or reflect consideration of issues of access (e.g., in determining levels of copayments), they do not have the explicit goal of ensuring quality care or facilitating quality improvement. Approaches to incorporating such an explicit goal into payment policy should be explored. This research agenda should include work in the following areas: blended or bundled methods of payment for providers, multiyear contracts, payment modifications to encourage use of electronic interactions between providers and patients, risk adjustment, and alternative approaches for addressing the capital requirements necessary to improve quality. Blended or bundled payments may offer providers greater flexibility in incorporating quality. Multiyear contracts can encourage longer-term relationships

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