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Four Core Drivers of High-Value Health Care: Payment Reform
by Kyle Monroe, Vice President, Network Development & Provider Relations

This article takes a deeper look at payment reform, and why it’s central to our mission of moving health care forward by controlling costs, improving quality, and engaging individuals in their health.

Rewarding providers for high-quality care isn’t simple. The culture of health care has been murky and unpredictable. Health care providers aren’t viewed as service providers, because health care is more than a business transaction. And traditionally, 100% of the risk has been on purchasers. This means that employers, as purchasers, have paid for waste and mistakes, even when the health care provider is at fault. This long-established history makes payment reform complicated but nevertheless necessary.

Incentivize Quality Care

Achieving payment reform by creating the right incentives for care delivery is the foundation of the alliance. We’ve used our strength in numbers to pursue unique contract provisions that protect our members and their employees from unexpected charges. We’re building on that foundation to include a focus on cost and quality transparency (our first core driver) to continue the payment evolution.

Payment Reform In Action

Now, we are starting to implement contracts that use Medicare-based pricing. Medicare, the largest purchaser of health care in the US, has done the work to establish the base rates for various services and then adjust them by provider to factor in geography, patient mix, and quality metrics. Medicare-based pricing gives us the benchmark needed to pay a fair price for services, rather than focusing on a savings of total charges.

Paying providers also enables employers to use plan design (our next core driver) to incentivize employees to use lower-cost, higher-quality providers.

The Real Cost of Care

These efforts are moving us away from the fee-for-service model toward “Total Cost of Care” contracting. In a Total Cost of Care (TCOC) model, 100% of the care provided to a patient, or a group of patients, is considered when analyzing reimbursements.

This new direction helps us identify patterns of overuse and inefficiencies in the health care system that remain hidden in a fee-for-service model. It also moves the risk traditionally born by employers for inefficient care and medical errors to those responsible: the health systems. We aim to identify cost-saving opportunities so we can reward provider partners that deliver the most cost-effective care to our employees and their families – the real way health care should work.

What Can Employers Do?

Employers that join together, like members of The Alliance, can use their collective bargaining power to influence the change in health care that employers want. The Alliance’s solutions, like bundled payments, QualityPath©, and Medicare-based pricing, are customizable to each of our members’ circumstances and their appetite for achieving cost-savings. To learn more about how The Alliance uses Payment Reform to cut costs and improve health care, contact us.


Kyle Monroe joined The Alliance in 2017. His responsibilities include creating and maintaining relationships with health systems, clinicians and other providers to support The Alliance’s strategic goals of improving high-value health care and leading new purchasing strategies. Kyle received his Kyle received his Master's of Business Administration in accounting and finance from the University Of Louisville College Of Business.

 
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