Catalyst for Payment Reform

Intro to Delivery Reform


Intro to Delivery Reform

What is Delivery Reform?

Delivery reform uses mechanisms, such as multidisciplinary team-based care, care management, payment reform, benefit design, and technology, to change the incentives and structure of the health care system to improve the quality and efficiency of care, provide greater access to care, and create healthier populations. Examples include patient-centered medical homes (PCMHs), accountable care organizations (ACOs), and focused factories.


Why Should Employers and Other Health Care Purchasers Care About It?

Health care quality and safety in the United States fall far short of where it should be.  Efforts to reform the delivery of health care are being implemented and tested throughout the country by the Centers for Medicare and Medicaid Services, states, commercial health plans and employers and other health care purchasers. The goal is to improve quality and lower costs by redesigning how physicians, hospitals and other providers deliver care and how consumers seek care.

  • The Patient Protection and Affordable Care Act (ACA) sharpened the U.S. health care system’s focus on delivery reform. Among other provisions, the ACA created the Centers for Medicare and Medicaid Innovation to implement and test new health care delivery models with hospitals, physicians and health systems nationally.
  • Private sector payers and purchasers are also experimenting with changes to the current financing and structure of the health care system to improve access, quality and affordability for their populations.

What Are Examples of Delivery Reforms?

Delivery reform can take on many forms and structures.  There is special focus today on ACOs and PCMH, though there is large variation in the design and implementation of these models.

  • ACOs are groups of providers that share financial and medical responsibility for providing coordinated care to patients, with financial incentives to provide high-quality care and limit avoidable, unnecessary spending. ACO physicians receive standard fee schedule payments and hospitals receive either per diems or diagnosis-related groups. The ACO is also typically under either a shared savings or shared risk arrangement, and savings or overspending are calculated against a target and is based on performance against quality measures.
  • PCMHs are a redesign of primary care delivery emphasizing population health management, multidisciplinary teams, and care management for at-risk patients. Many PCMHs receive payment according to a base of standard fee schedules, along with incremental payments for care coordination. 
  • Focused Factories are characterized by a uniform approach to efficiently delivering a limited set of high-quality services, where expert specialists perform procedures or provide care for a condition and related services for which they have great expertise. Providers can be paid by standard fee schedules or receive bundled payments (a coordinated payment to all providers related to the procedure, condition, or treatment across the episode or length of care).

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