|Fee-For-Service Healthcare Payment System Not Effective, Experts Say
Leaders in healthcare and healthcare policy feel
strongly that the way we pay for healthcare in the U.S. must be
fundamentally reformed, according to a survey by the Commonwealth Fund.
Commonwealth reports that more than two-thirds (69
percent) of respondents expressed strong dissatisfaction with the
current system, which is generally based on fee-for-service payment,
saying the current system is not effective in encouraging high quality
and efficient care.
The current fee-for-service system reimburses individual
services — hospital stays, physician visits and procedures
— rather than paying for the most appropriate care for the
patient over the course of an illness or a time period.
In doing so, it creates incentives to provide more
technical and more expensive services, rather than encouraging more
effective, higher-value care. Only 1 percent of healthcare leaders
surveyed said they preferred the current fee-for-service payment system
to alternative approaches, Commonwealth said.
The survey asked respondents their opinions about
various policy strategies for improving U.S. health system performance.
Eighty-five percent of respondents believe fundamental provider payment
reform with incentives to provide high-quality and efficient care over
time is an effective strategy. Similarly, a majority of leaders deemed
bonus payments for high-quality providers (55 percent) and public
reporting of information on provider quality and efficiency (53
percent) as effective or very effective strategies for improving
performance, Commonwealth said.
There was strong support for a move away from
fee-for-service payment toward bundled approaches — making a
single payment for all services provided to a patient during the course
of an episode or time period. When asked about preferred options for
payment reform, 53 percent of opinion leaders chose a blend of modified
fee-for-service and bundled per-patient payment, while another 23
percent chose bundled per-patient payment alone.
Overall, leaders expressed an unequivocal call for
change. "The current financial crisis has changed the nature of the
debate over health reform," said Commonwealth Fund President Karen
Davis, "More than ever, it will be essential to craft a plan that will
give more Americans health security while simultaneously controlling
costs. These results show that most leaders favor rethinking the way we
pay healthcare providers, to attain better value and lower costs for
Other findings from the survey include:
- An overwhelming proportion of opinion leaders (85
percent) reported they support or strongly support revising the
Medicare fee schedule (i.e., the resource-based-relative value
schedule) to increase payments for primary care.
- Respondents voiced strong support for realigning the
system to pay for transitional care services (77 percent), paying
physician practices a monthly per patient fee for serving as a medical
home (74 percent), and eliminating payments resulting for "never
events," like avoidable infections or complications in hospitals (67
- Nearly three of four opinion leaders are in favor of
Medicare negotiating pharmaceutical prices and engaging in competitive
bidding for durable medical equipment as strategies to reduce the
growth of healthcare costs.
- Nearly three of five (57 percent) healthcare opinion
leaders said shared accountability for resource use — holding
healthcare organizations, including hospitals and physicians,
accountable for the resources used in caring for patients over time and
sharing a portion of costs saved — is an effective strategy.
- Slightly more than a third (37 percent) believe
paying for performance — providing bonus payments to providers
for high performance — would be effective or very effective in
improving healthcare efficiency.
- In addition, more than half (56 percent) of
healthcare opinion leaders support or strongly support the creation of
a Medicare Health Board, which would be established by Congress and
empowered to make Medicare payment and benefit decisions, within
Address: The Commonwealth Fund, 1 East 75th Street, New York, NY 10021; (212) 606-3800, www.cmwf.org.