Payment Reform Options: Episode Payment Is A Good Place To Start

Abstract

New strategies to control U.S. health spending growth are urgently needed. Although provider payment cuts are likely, cutting fee-for-service (FFS) payments will hurt quality and access. A more sensible approach would be to restructure the delivery system into organized networks of providers delivering reliable, evidence-based care. But restructuring will not occur without payment policy reform. Four policy options are commonly cited: recalibrating FFS, instituting pay-for-performance, creating episode-based payments, and adopting global payments. We argue that episode payments are the most immediately viable approach, and we recommend that payment reforms precede any payment reductions so that new delivery models can gain traction.