Bigger carrots, stronger sticks key to cost containment

Tools

Effective cost reform will require stronger Medicare and Medicaid incentives for providers and increasingly stronger sticks to discourage nonparticipation, according to an analysis published in the May issue of the journal Health Affairs.

In the article, Paul B. Ginsburg, president of the Washington, D.C.-based Center for Studying Health System Change, argues the carrot-and-stick approach also needs to involve beneficiaries. One possibility would be to incentivize patients to enroll in an accountable care organization, he writes.

He describes payment reform pilots blending fee-for-service payment with payment based on broader care such as an entire health episode as a "crucial first step," but one that alone cannot meaningfully contain costs.

"Ending fee-for-service payment in favor of accountable care organizations and bundled payment once and for all is unlikely to be feasible for quite some time, but gradually increasing disincentives for providers that do not participate in reformed payment approaches is a practical way to move forward," he concludes.

Three health system leaders working with the Centers for Medicare & Medicaid Services to test four new models of payment based on episodes of care recently identified engagement of clinical leaders and physicians as critical to achieving success, FierceHealthcare previously reported.

Strong relationships with other community providers such as skilled nursing facilities also are key to a successful bundled payment plan, Ray Montgomery, president and CEO of White County Medical Center in Searcy, Ark., said last week during an executive briefing at the American Hospital Association's annual meeting in Washington, D.C. CMS launched the new bundled payment initiative in January.

To learn more:
- here's the abstract

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