Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?

McClellan, Mark

doi:10.1257/jep.25.2.69

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Journal of Economic Perspectives: Vol. 25 No. 2 (Spring 2011)

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Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?

Article Citation

McClellan, Mark. 2011. "Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?." Journal of Economic Perspectives, 25(2): 69-92.

DOI: 10.1257/jep.25.2.69

Abstract

This paper focuses on a broad movement toward a fundamentally different way of paying healthcare providers. The approach reaches beyond the old dichotomies about whether healthcare providers are reimbursed on a fee-for-service or a "capitated" or per-person payment. Instead, these reforms seek to create direct linkages between payments to healthcare providers and measures of the quality and efficiency of care. After an overview of payment reforms for healthcare providers and their welfare implications, this paper discusses a range of empirical studies. These often small-scale studies suggest that provider payment reforms in conjunction with greater attention to improving measurements of care quality and outcomes can have a significant impact on quality of care and, in some cases, resource use and costs of care.

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Authors

McClellan, Mark (Brookings Institution)

JEL Classifications

I11: Analysis of Health Care Markets
I18: Health: Government Policy; Regulation; Public Health

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