Health Care Payment Reform Innovation Your Ideas and Feedback, July 2011

Concept Over the last several years, the Robert Wood Johnson Foundation (RWJF) has supported a variety of health care payment reform experimentation. That support includes relatively large pilot projects such as PROMETHEUS Payment as well as a range of smaller payment experimentation efforts in Aligning Forces for Quality markets and elsewhere. Last year, for example, RWJF conducted a national competition to identify innovative payment experiments. That competition resulted in five new awards that began a few months ago. See that 2010 CFP, now inactive, posted here. RWJF continues to be interested in stimulating locally based, payment experimentation to promote high-value health care outcomes that leverage existing market knowledge, partnerships and resources. The rationale is that the field still does not have a sufficient number and variety of promising payment reform approaches. Some worry that the field might be focusing too quickly on one or two models. We would like you to share your ideas about ways we could help promote payment innovation. Background Health care in America is uneven and often of poor quality even though we spend more on care than any other nation. The way we pay for care is a major, underlying cause of poor health care quality and value. Generally, our current payment systems provide powerful incentives for delivering more services to more people. Paying for more care rather than better care, in turn, fuels the growth in health care costs but does not necessarily promote higher quality or value. Current payment schemes also too often inhibit efforts to improve care. Ultimately, payment methods must change in ways that reward high value rather than high volume. Fundamental payment reform is inherently complicated and risky. Success depends on many interconnected pieces of the market and multiple interested stakeholders. Nevertheless, value-enhancing payment methods are necessary for high-value care. The Affordable Care Act includes a variety of provisions aimed at stimulating both payment and delivery system reforms. New federal payment experiments are unfolding now and over the next several years. These payment efforts focus primarily on Medicare and to a certain extent Medicaid, with approaches such as introducing Medicare Accountable Care Organizations (ACOs) and a variety of offerings from the Centers of Medicare and Medicaid Innovation. 1

Input that would be helpful: Please consider the following questions. Any answers you provide will help us shape our thinking for how we might best promote local level health care payment innovation. We do not expect that you would answer all questions. In addition, you may have input that does not fit neatly in these questions. Please add those comments as well or instead. Thanks ahead of time for your help.  Do you agree that the field needs more payment experimentation? For instance, one could feel strongly that instead of promoting more types of payment innovation, the field should concentrate on implementing some key promising delivery and payment models.  Do you have suggestions for aligning private sector payment experimentation with federal attempts envisioned in the ACA or sponsored by CMMI to promote payment innovation? Alternatively, do you believe instead that it is preferable to work independently of those efforts?  What gaps do you perceive in how the field is considering and discussing health care payment reform?  Many believe that beneficial payment changes depend on aspects of a given health care market like: better and widely shared performance information, consumer or purchaser ability to demand high quality, and resources that support improvements in care. Others, however, might say that we should focus efforts on specific entities, not markets, to help those entities develop promising approaches. Thoughts or reactions?  Payment for health care, obviously, is a transactional activity between or among parties to the given transaction. Do you see a role for broad market or community collaboration to support payment reform? Or, alternatively, should payment experimentation occur for the most part among dyads or triads of parties to payment transactions? Why or why not?  What kinds of payment reform activity would you like to foster?  Do you have other important ideas around promoting innovative payment experimentation in health care?