The healthcare reform goal of increasing eligibility and coverage cannot be realized without simultaneously achieving control over healthcare costs. The reform of existing payment systems can provide the financial incentive for providers to deliver care in a more coordinated and efficient manner with minimal changes to existing payer and provider infrastructure. Pay for performance, best practice pricing, price discounting, alignment of incentives, the medical home, payment by episodes, and provider performance reports are a set of payment reforms that can result in lower costs, better coordination of care, improved quality of care, and increased consumer involvement. These reforms can produce immediate Medicare annual savings of $10 billion and create the framework for future savings by establishing financial incentives for long-term provider behavior changes that can lead to lower costs.
Overall plan losses and higher expenditures among a number of case mix groups suggest a need for refinement of S/HMO operations--especially in case management relationships to medical care and in the selection of "high risk" cases.
A patient-centered approach to defining episodes of care around a hospitalization can provide the basis for creating expanded bundles of services that can be used as the basis of payment. Paying by episodes of care strengthens the incentive to providers to deliver care efficiently. A hospital-based episode of care prospective payment system can be phased in over time by gradually expanding the services and the time period included in the episode. Establishing equitable prospective episode payment amounts requires that the severity of illness of the patient during the hospitalization and the chronic disease burden of the patient be taken into account.
The Channeling Demonstration examined the effects of case management interventions on a variety of outcomes. In the study, longitudinal data were collected from interviews of cases and controls. A multivariate procedure applied to this data identified groups with specific health profiles. Six profiles described health variation over individuals, and time, according to likelihood ratio statistics. Six sets of life tables were calculated, one for each health profile, to estimate the average duration of service use and the "follow-up" services used. A number of differences, and changes, in service use between the six groups were significant.
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