Payment Incentives and Integrated Care Delivery: Levers for Health System Reform and Cost Containment

By Korda, Holly; Eldridge, Gloria N. | Inquiry, Winter 2011 | Go to article overview
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Payment Incentives and Integrated Care Delivery: Levers for Health System Reform and Cost Containment


Korda, Holly, Eldridge, Gloria N., Inquiry


The Patient Protection and Affordable Care Act encourages use of payment methods and incentives to promote integrated care delivery models including patient-centered medical homes, accountable care organizations, and primary care and behavioral health integration. These models rely on interdisciplinary provider teams to coordinate patient care; health information and other technologies to assure, monitor, and assess quality; and payment and financial incentives such as bundling, pay-for-performance, and gain-sharing to encourage value-based health care. In this paper, we review evidence about integrated care delivery, payment methods, and financial incentives to improve value in health care purchasing, and address how these approaches can be used to advance health system change.

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National health care reform legislation enacted in March 2010 as the Patient Protection and Affordable Care Act (ACA) opened the door to significant changes in health care organization, delivery, and financing. The ACA introduces a variety of financial and other incentives for patients, providers, and health plans, with the goal of advancing value-based health care: improved health outcomes through quality care that is accessible and affordable, and slows the growth of health system costs. As health care approaches 18% of the gross domestic product (GDP), value-based approaches are becoming a popular alternative to price regulation, which has fueled sharp opposition from providers and concerns about access and gaming reimbursement to change service mix, mitigating recent cost-lowering efforts (McClellan 2011).

Payment methods and incentives are principal tools to advance and promote integrated care delivery and models under the ACA. These models include patient-centered medical homes (PCMHs) and accountable care organizations (ACOs) that rely on interdisciplinary provider teams to deliver coordinated patient care. These organizations use health information and other technologies to assure, monitor, and assess the quality of care. Care that integrates primary care and behavioral health can be developed within or apart from PCMH and ACO models. Obtaining value from these integrated approaches typically involves payment and financial incentives, such as bundling, pay-for-performance (P4P), or gain-sharing methods that reward coordinated interdisciplinary activities, patient-focused care, and quality care (see Figure 1).

These payment and financial incentives also are key policy approaches to address health care cost growth.

[FIGURE 1 OMITTED]

The ACA not only promotes integrated care models, it also calls for pilot programs and research and demonstration projects that test new value-based approaches to delivering health care services, paying providers, and designing benefits to be launched through the Centers for Medicare and Medicaid Services (CMS). These programs address ACOs' shared savings, projects integrating care around hospitalization, pilot testing P4P programs with specific providers, national pilot programs on payment bundling, and more. These initiatives are intended to inform and refine use of these payment methods and incentives, and new delivery approaches for application and practice in the field. As the ACA ushers in integrated care delivery as a way to increase value for the health care dollar, how can payment and financial incentives be used to improve quality, accessibility, and affordability of care? What do we know about "what works" to use these tools as levers for cost containment and health system reform?

Methods

To inform these questions, we conducted a broad environmental scan and review of current literature to examine what is known about payment and other financial incentives that support the new integrated delivery models. This included a search and review of academic, peer-reviewed journals; white papers and reports from foundations, and federal and state public health agencies; and websites, online media, and print media from public, private, and nonprofit organizations.

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Payment Incentives and Integrated Care Delivery: Levers for Health System Reform and Cost Containment
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