Creating and Paying for Value

The top priority for health-care reform is creating greater value in the health-care system -- better quality, safety and service at a lower cost. And it needs to start with Medicare.

Currently, Medicare and other insurers reimburse for the number of services provided and for hospital admissions and re-admissions. This method encourages providers to provide services -- whether or not they are needed or effective. According to the Dartmouth Atlas of Health Care, areas of the country that provide the worst outcomes at the highest costs get reimbursed the most; areas of the country that provide the best outcomes at the lowest costs get reimbursed the least. There is no other industry in the country in which we, as consumers, pay more for bad products and bad service.

If Medicare stepped back and said, "We are going to reward providers for better outcomes, better safety and better service that is delivered efficiently," we would be taking a significant step to reforming health care and lowering health-care costs. Examples of steps Medicare could take would include introducing value into their reimbursement and bundling payment to physicians and hospitals for high-cost procedures and chronic care. Providers would have an incentive to adopt best practices and provide superior care and safety to patients. The amazing evidence is that, when patients have better outcomes, costs go down. It's a win-win situation; better care at lower costs. And there are providers and regions of the country that are doing it now.

Medicare needs to start reimbursing based on the value that providers give patients. It's a huge first step, but an essential one.

By Jeffrey Korsmo  |  June 11, 2009; 10:07 AM ET  | Category:  Health Care Reform , Medicare
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