The national health care reform debate has a lingo all of its own. There's "bend the cost curve,''a phrase thrown around to describe the need to rein in skyrocketing medical costs. "Single payer" refers to a nationalized health care system like that of Canada's in which the government pays all the bills. Going forward, expect to hear this one a lot: "paying for value.''
Along with reducing geographical disparities in Medicare reimbursements, reforming the system so that it "pays for value'' is at the top of most Minnesota providers' health care reform wish list. It's not a hard concept to grasp. Right now, the health care system rewards providers who prescribe the most tests and procedures, instead of the providers who deliver quality care at an affordable price. Minnesota providers want the system overhauled so that it does the reverse: rewards quality instead of quantity.
One question that frequently comes up is this: how is "paying for value" different than "capitation,'' a payment reform that proved unpopular with consumers when managed care organizations here and elsewhere tried it in the 1990s. Park Nicollet CEO David Wessner accepted the challenge of explaining the difference. Here's his very readable take:

"Capitation is a lump sum payment to care providers 'per head' (literally) and has some bad side effects:

  • Providers now have to bear the insurance risk of someone's health, something they are not in the business of doing and do not have the information systems to manage nor the capital structures to fund. This causes a dangerous transfer of risk that can threaten the viability of doctors and hospitals.
  • Capitation creates a dynamic where at any point in time the economic interests of the patient and the provider are not aligned. The patient wants the care and the provider must pay for the care. When understood by the patient it creates a corrosive dynamic for the healing relationship between patient and physician. This happened in the late 90's when managed care was under attack in the Twin Cities.

Payment for value can mean many different things, but the way I define it is that providers get paid for the care provided but the amount they are paid is dependent upon other factors such as quality measures, outcome measures or cost measures, like the total cost of care for a population. Providers are not at risk for the care provided (they will get paid for the care), but the profitability of their operation will be dependent upon the relative level of quality or efficiency of their patterns of care. So for the individual patient there is not a misalignment of incentives but there is accountability for the effectiveness and efficiency of the patterns of care that the physician and her organization deliver. That is a good thing and a necessary thing."