Commonwealth Fund: The Potential of Global Payment

Last year, the Special Commission on Payment Reform unanimously approved a transition from fee-for-service to global payment (see our blog report). Since then, there has been a lot of discussion about global payment and how to get there. A recent paper published by the Commonwealth Fund, The Potential of Global Payment: Insights From the Field, provides us with information from health industry experts about global payment. They shared their successes, challenges, and ideas.

The report endorses global payment as a way to improve quality and save on costs. Utilizing a global payment system instead of a fee-for-service model may generate a 20%-30% reduction in costs while improving the quality of health care. Global payment systems vary and have been utilized successfully by a range of provider structures from larger hospital-dominated systems, primary care practices, and independent practice associations. Each has developed a slightly different way to deliver better care within a global payment structure.

Physicians using global payment arrangements felt that it enabled them to focus more on the needs of the patient instead of maximizing services rendered. Global payment allows for a wider availability of services not usually available under fee-for-service plans including phone consultations, web visits, provider-initiated outreach calls, home visits, patient education programs, and inpatient admission management.

A key point in the report is that the successful transition to global payment may depend significantly on a shift within health care management leadership. As one subject quoted in the report remarked, “Current provider and plan leadership is selected based on their ability to stop change.” The report suggests allowing for a multi-year transition period that can encompass the necessary structural changes as well as provider and patient education.

Experts also believe that the support of Medicare is critical to the success of a new payment plan. Physicians and hospitals make a number of business decisions based on the reimbursement levels they can expect from Medicare, including services offered. Because the health care needs of Medicare patients are so great, changes in this area also have the greatest potential for improving health care value.

Yet while a global payment system is an essential component of managing health care costs, it is not enough by itself to control costs. Experts agreed that payment reform is only the beginning of a health care solution. We need to improve care coordination, develop patient engagement tools and make sure the patient is the center of our health care system.
-Criselda Ruiz

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