Controlling Costs and Reforming Payment Approaches

Key transformations in the organization and delivery of health care hold great promise not only for improvements in quality and efficiency but also cost containment. However, capitalizing on these transformations may require funding to conduct comparative effectiveness research and develop tools for using it. Such research would provide an objective basis for selecting appropriate procedures, preventive services, and interventions. Three strategies that could improve quality and decrease costs are the efficient use of health information technology (HIT), payment structures that provide incentives for desired outcomes, and care coordination. 

More widespread use of HIT: This technology can help clinicians adhere to evidence-based practice guidelines, eliminate service duplication, make correct diagnoses, and reduce errors (e.g., those caused by illegible handwriting). Sharing electronic information among providers can promote coordination. HIT can also remind clinicians and patients to use preventive services and enhance consumers’ self-management and engagement by affording them access to their personal health information. It would streamline administrative processes through electronic appointments and speed retrieval of test results. 

Strategies that align payment with desired outcomes: Payment adjustments resulting from errors or subpar care could encourage higher-quality and more efficient care. Examples include lower payments for preventable hospital readmissions and shared-risk strategies. Another example is refusing payment for services that should never have been provided (“never events”), such as surgery on the wrong body part. Quality incentives like robust risk adjustment ensure providers do not avoid high-cost patients and measures that assess performance. 

Improved care coordination: Better care coordination and more patient- and family-centered care would improve quality. It could also potentially save resources by avoiding duplicative tests and repeated hospital visits. And improved coordination among clinicians improves the quality of care patients receive as they transition among clinicians and care settings. This is particularly important for individuals with chronic conditions and long-term services and supports needs. Research is needed to inform methods of payment and service delivery. It would be beneficial to consider how operations research could inform clinical practice. 

Consumer incentives: These could encourage the use of higher-value services and could lead to cost savings if patients seek care from the most effective and efficient practitioners and providers.