Sample Solution

Payment reform is necessary to increase value in healthcare due to the current fee-for-service model, which emphasizes quantity of care over quality. Fee-for-service payment incentivizes providers to deliver more procedures and tests that may not actually improve patient outcomes or reduce costs. Payment reform shifts the focus away from volume and toward providing high-value, cost effective care. This can be achieved through various models such as alternatives to fee-for-service such as Accountable Care Organizations (ACOs). ACOs provide incentives for providers to coordinate care, engage patients in their own health management, and create efficiency in order to achieve better health outcomes while reducing costs.

One example of a successful ACO is Geisinger Health System’s Proven Care program in Pennsylvania which offers bundled packages with fixed prices for select services. In this case a 6 month follow up service bundle after open heart surgery was offered with a 90 day warranty period where any complications during that time would be covered without additional cost. The Proven Care program created an incentive for providers and hospitals within the system by rewarding them based on how well they met quality standards rather than just paying for each procedure or test performed individually. Additionally, it resulted in improved outcomes among patients who underwent surgery within the system because there was increased coordination amongst specialists, access to data about past treatments and outcomes which enabled physicians to make better decisions when treating their patients resulting in lower readmission rates and mortality rates despite higher volumes of surgical procedures being done at Geisinger than ever before [1].

At the same time however there have been numerous examples of ACOs failing as well – one example is Medicare Shared Savings Program (MSSP) which was launched by Centers for Medicare & Medicaid Services (CMS) under Affordable Care Act (ACA). Under MSSP organization would receive shared savings if they are able to reduce growth rate of total Medicare expenses compared with a historical baseline while also meeting certain quality thresholds [2]. Despite initial success seen soon after its inception 15% reduction in growth rate year over year ended very quickly once bonuses paid out were taken into account [3], suggesting that target benchmarks set were too low going forward thus diminishing sustainability across the board resulting large number of participants opting out from MSSP since then[4]. CMS has already taken some steps like setting higher targets but challenges remain since moving away from FFS reimbursement requires significant changes on part both business operations like care delivery processes along with IT infrastructure investments needed to track performance metrics.[5]

Another example comes from Priority Health, Michigan’s second largest commercial insurer whose ACO failed largely due its inability align incentive structure between payors and provider organizations.[6] Even though Priority had managed establish relations with large parts primary & specialty care network throughout state unfortunately those relationships had not been fully realized given lack common vision driving mutual goals between payors and providers resulting diminish results forecasted initially.[7] ACOs fail when stakeholders don’t share common mission prioritize financial objectives over clinical ones or operate independently without using available data support decision making processes.[8] In other words success depends upon coming together towards same goal creating long term relationships built trust ultimately delivering provided services efficiently outperforming traditional fee service models used previously .

To sum it up , payment reform through use models like Accountable Care Organization offer potential solution increasing value healthcare delivery overall helping contain spiraling costs associated rising utilization rates currently seen across US healthcare system . While some organizations might reap benefits quickly rewards greater need careful planning thoughtful execution taking into consideration interests all stakeholders involved otherwise risk failure similar what we observed cases mentioned above .

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