The Old Way of Paying for Health Care Needs to Change
Blue Daily
| 3 min read
Health care is unaffordable for too many families and businesses. One of the reasons for it may come as a surprise — how health care is paid for.
The antiquated “fee-for-service” payment model — where providers get paid for every test, treatment or procedure they perform — encourages volume over quality because providers get paid for doing more, regardless of whether the patient’s health improves. Multiplied over millions of patients, this approach to payment leads to higher health care costs that drive your health insurance rates higher.
To truly promote affordability and better patient outcomes, Blue Cross Blue Shield of Michigan is changing the payment model to reward providers across care settings based on quality, experience and value, not volume. This work is being done in partnership with Michigan health systems and physicians.
Why Fee-for-Service Doesn't Work
Encourages Volume Over Outcomes: We need to change the financial incentives for providers from tests and procedures to focusing on the long-term health of patients and their chronic disease management. Providers are paid when they do more tests and procedures — regardless of whether a patient improves or not. There’s little financial incentive to focus on the long-term health of the patient or chronic disease management.
Lack of Coordination: There’s little financial incentive for hospitals and doctors to coordinate care, often resulting in duplication of tests, treatments and gaps in patient care. This results in more services being provided and higher costs flowing into health insurance premiums.
The Solution: Value-Based Care
Blue Cross has been leading the way toward a better approach known as value-based care. In this model, providers are paid based on the patient outcomes they deliver — including care quality and overall efficiency — not volume. This payment approach incentivizes:
Prevention and Wellness: Providers are rewarded when they keep patients healthy, reducing the need for expensive treatments later.
Coordinated, Effective Care: Primary care physicians, specialists and health care systems communicate and work together to coordinate their patients’ health outcomes, cutting down on unnecessary and duplicated care.
Better Health Outcomes: Providers who demonstrate success in improving the health of their patient populations have the potential to earn more. But they also earn less if they don’t produce strong outcomes for their patients.
This shared financial accountability model emphasizes overall performance in improving the health and well-being of patients.
Value-based care puts our members’ health first, and it cuts down on unnecessary health care costs.
Our Proven Track Record
Blue Cross has championed value-based care for 20 years through Value Partnerships initiatives like the Physician Group Incentive Program (PGIP), Collaborative Quality Initiatives (CQIs), Blueprint for Affordability and the Patient-Centered Medical Home (PCMH). These leading programs have made Michigan a national model for value-based care, improving health outcomes and saving more than $6 billion by preventing disease, reducing unnecessary hospital visits and delivering coordinated, proactive care.
That is $6 billion that has not been factored into your health insurance costs. Clearly, we need to do more — and we need our provider partners to work with us to make it happen.
At the primary care level, we have proven this model works. But there’s more work to do. Hospitals and other specialty settings need to increasingly move to value-based care.
If more hospitals and providers transition from fee-for-service to increased levels of value-based care, we can all benefit from improved health outcomes, better patient experiences and lower costs. At Blue Cross, we’re committed to supporting providers through this transition and advocating for broader industry-wide change.
When everyone commits to paying for quality — not quantity — we’ll create a system that truly serves the health of our communities, delivering affordable and effective care for everyone.
Image: Getty Images
