Principles of Transformed Payment [VIDEO]

In this video, Dawn Carter discusses the principles of transformed payment and presents four inherent principles in that system.

Video Transcription:

I’m Dawn Carter. I want to spend a few minutes today talking about the principles of transformed payment. The healthcare industry in the United States has a long history of care delivery being heavily influenced by how we pay for that care. One of the most dramatic examples was the introduction of the prospective payment system for hospitals in the early 1980s. As a result of that payment change, hospital inpatient census declined by almost 40% over the ensuing decade.

Today, we have difficulty recruiting primary care physicians in many markets, because specialists and specialty care are paid for at much higher rates than primary care providers. For all of our talk of population health and our strategies around population health, we believe it will take a fundamental change in the payment system to truly transform healthcare in the United States. Regardless of the mechanics, we believe there are four inherent principles in a transformed payment system.

First, underlying that transformation will be the ongoing effort to ensure that every person has some form of coverage, and thus payment for care. Second, payment will be fixed across the continuum such that the volume of care or services or procedures will have no impact on how that care is paid for.  That will shift the financial risk to providers. Keep an eye on Maryland, they are leading the path on this journey.

Third, because revenue will be fixed across the continuum, payment will essentially be site neutral. Meaning, where that care or procedure is delivered will have no impact on how much is paid for that care.  However, it may impact how much it costs the provider to deliver that care.

Fourth, quality metrics and patient outcomes will be transparent and will be tied to payment so as not to incentivize insufficient or poor care. All together these principles will combine to ensure that providers across the continuum are delivering the most effective care in the least costly setting.