Practical Advice on Payment Reform

In order for payment reform to be successful from the perspective of purchasers, payers, providers, and patients, Harold Miller, President and CEO of the Center for Healthcare Quality and Payment Reform asserts that there are four separate goals which must all be met.  If you’re familiar with Harold Miller’s work on healthcare payment reform, then you know he is thoughtful, thorough, and detailed. This is evidenced in his April 2015 publication The Building Blocks of Successful Payment Reform: Designing Payment Systems that Support Higher–Value Health Care. Through the generous support of the Robert Wood Johnson Foundation and sponsored by the Network for Regional Healthcare Improvement (NRHI), Miller’s 74-page brief lays out criteria for a successful health care payment reform design. Last month, I was fortunate enough to be part of a “virtual office hours” event with Harold Miller, sponsored by NRHI. Here’s what I took away.

Miller told us that there are four main components (building blocks) to payment reform, and they have to go together. First, care delivery must be flexible to enable providers to deliver care in a way that meets the unique needs of individual patients. Next, there must be accountability for both for spending and for quality.  Finally, payment must be adequate to cover the cost of care. These are what Miller calls the Building Blocks of Payment Reform. In his publication, he outlines various options for each of the building blocks, in various combinations, in an effort to aid in the transition towards value-based payment.

Change starts by making the business case for payment reform, discussed in detail in a paper of the same name:  However, change shouldn’t start with payment reform – it should start by asking, “What is the actual opportunity for improving care?”  This should be followed by identifying the barriers in the payment system to support improved care. Of course, if there are no barriers in the payment system, then there is no need for payment reform!

Several times throughout the Building Blocks publication, the term “that the provider can control,” was noted as a qualifier. I asked Miller to explain further.  He summarized that first, when presented with any sort of ‘patient responsibility’ component, physicians tend to bring up their most challenging examples – the sickest, most defiant, or the least likely patients to follow through on doctor’s orders. In reality, the provider is likely correct, they aren’t able to influence those patients in any meaningful way. However, there is a wide range of patients who fall somewhere in the middle.  Do providers, or their staff, even know what barriers those patients have? Have they asked, why isn’t the patient adhering to the recommended changes? For example, does the asthma patient know how to use their inhaler? Studies show that improper asthma inhaler device use is most likely one of the major causes associated with uncontrolled asthma and frequent ED visits. Many people are not adhering to their treatment plan because no one has ever tried to figure out their barriers! If providers and organizations can figure this out, then they can focus on the middle of distribution for better results.  Healthcare should have the necessary flexibility to give patients what they need, so that they can do better.  Miller cautions not to expect 100% results, but to use teach back techniques and follow through. It’s not necessarily a benefit design issue to incent patients, but an education issue.

And what about non-medical barriers? Does a patient have the necessary transportation to be able to get to the office for an appointment? If this is a barrier to “better health,” payment reform needs to be flexible enough to find a way to pay for transportation so the patient can be seen. This is much less expensive – and will likely have better health outcomes – than the patient not arriving for an appointment because they don’t have transportation.   Many times, these patients wait until there’s a crisis, then call for an ambulance to get taken to the hospital.

What if, due to payment reform, care will actually cost MORE in the short term in an effort to reach longer term goals of better health and reduced spending? Miller reported an effort undertaken in Minnesota in order to offset the costs, organizations paired long term ROI initiatives (such as depression) with shorter term initiatives (such as reducing diagnostic imaging). Others could use similar approaches.

What do your organization’s better health and better care goals look like? How does the current payment system affect being able to meet those goals? What experiments have been run? I’d love to learn about what others have tried. Please contact me at [email protected].


  • Center for Healthcare Quality and Payment Reform:
  • Network for Regional Healthcare Improvement:
  • Robert Wood Johnson Foundation:
  • ThedaCare Center for Healthcare Value:

Rachel Regan
Program Manager, Payment Initiatives
ThedaCare Center for Healthcare Value

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