among providers, purchasers, and payers to permit investment in improved quality of care. Payment methods that support electronic or other forms of communication between providers and patients can improve contacts with the health system. Payment methods that are appropriately adjusted for the risk of the patients served can support the provision of needed care and improved sources. Capital will be needed for the redesigning and reengineering of health care that will be required to improve quality. A better understanding is needed of how these, as well as other mechanisms, can enhance the effects of payment policy on the provision of high-quality health care.

The potential to link payment methods to priority conditions should also be explored. As noted in Chapter 4, priority conditions can provide a framework for aligning payment methods with patient needs and the ways care is organized and measured. If payment methods were designed to encompass the scope of services received by patients, providers could allocate resources according to patient needs, across provider types and settings of care. Pilot testing should include an evaluation of the use of bundled payments for priority conditions to provide incentives for redesigning care processes and to permit resources to be allocated according to the scope and types of services needed by patients.

The committee believes certain principles should guide the development of payment policies to reward quality, regardless of the specific payment method used for any given transaction. The aim of these principles is to guide payment policy reforms that can support care that is more patient-centered, evidence-based, and systems-based. Payment arrangements should facilitate alignment of the units of patient care delivered (including consistency with best practice) with the needs of consumers and patients, the unit of payment, and the level at which information is collected and shared. To achieve alignment that can reward quality care, payment methods should:

  • Provide fair payment for good clinical management of the types of patients seen. Clinicians should be adequately compensated for taking good care of all types of patients, neither gaining nor losing financially for caring for sicker patients or those with more complicated conditions. The risk of random incidence of disease in the population should reside with a larger risk pool, whether that be large groups of providers, health plans, or insurance companies.

  • Provide an opportunity for providers to share in the benefits of quality improvement. Rewards should be located close to the level at which the reengineering and process redesign needed to improve quality are likely to take place.

  • Provide the opportunity for consumers and purchasers to recognize quality differences in health care and direct their decisions accordingly. In particular, consumers need to have good information on quality and the ability to use that information as they see fit to meet their needs.

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