Moving (realistically) from volume-based to value-based health care payment in the USA: starting with medicare payment policy

J Health Serv Res Policy. 2011 Oct;16(4):249-51. doi: 10.1258/jhsrp.2011.010151. Epub 2011 Jun 14.


Employers and policy-makers in the USA are desperate to slow the rate at which health expenditures grow. Changing how most health care providers are reimbursed will be necessary to achieve this. Although both politically and practically daunting, massive restructuring or replacement of fee-for-service (FFS) reimbursement is what is most required. As the dominant reimbursement model in the USA, FFS payment to individual providers strongly encourages and financially rewards the quantity of care provided, regardless of its quality or necessity. Providing high quality, lower cost care with fewer complications and hospital re-admissions can even financial penalize providers. Unfortunately, physicians and other health providers respond rationally to existing financial incentives (translation: they do what they get paid to do and generally try to, or have to, minimize those activities and services for which they are not paid). Altering this reality and fostering the expansion of exemplary delivery models-such as the Mayo Clinic or Geisinger Health System-requires change in how providers behave. And changing behavior often starts with adjusting how providers are paid. Medicare is the programme and payer most capable of using payment reform to catalyze delivery system reform.

MeSH terms

  • Fee-for-Service Plans* / economics
  • Health Care Reform / economics
  • Health Care Reform / organization & administration*
  • Health Expenditures
  • Health Services Research
  • Humans
  • Medicare / economics*
  • Medicare / organization & administration
  • Reimbursement Mechanisms / organization & administration*
  • United States