Patient Responsibility News

How a Patient-Centered Payment System Creates Patient Choice

The Center for Healthcare Quality & Payment Reform says patient-centered payment systems should replace value-based care models.

patient-centered payment system

Source: Thinkstock

By Sara Heath

- Value-based payment models may not be adequate for ensuring quality care for patients, according to a recent report from the Center for Healthcare Quality & Payment Reform. Instead, a patient-centered payment system can deliver patient and payer choice and positive outcomes measures.

The report, authored by the organization’s president and CEO, Harold D. Miller, explained that a patient-centered payment system would overcome the pitfalls of current fee-for-service and value-based payment models.

Unnecessary spending and services run rampant in fee-for-service models, while clinicians face restrictive barriers to quality outcomes in many value-based outcomes. Making a payment model that is entirely patient-centric would eliminate those issues, Miller wrote.

“Both the Fee-for-Service system and current approaches to value-based payment and purchasing have a common flaw – their central focus is on how to pay providers for services or how to reduce spending for insurers, not on how to achieve good healthcare outcomes for patients at the most affordable cost for both patients and their insurers,” Miller said in the report’s executive summary.

A patient-centered payment system would put control and choice back in the hands of patients and their healthcare payers. Patients and payers could choose from provider care teams who have all agreed on a set of services and outcomes for a specific rate. The care team would only be paid if it met all parameters.

READ MORE: Should Value-Based Care Measures Become Patient-Centric?

This model is distinct from regular value-based care models because it allows clinicians to create their own requirements. The care team selects the quality outcomes by which they want to be measured. Additionally, the care team selects the payment they need for the services included in the encounter.

Both cost and quality are communicated with patients and payers, who can then select which care team fits their needs. If the care team fulfills the quality measures, the team receives their payment.

Miller outlined the nine different types of service models that must be developed under a patient-centered payment system. These include preventive care services, diagnosis and treatment planning, treatment of an acute condition, and management of a chronic conditions:

  • Monthly preventive services management
  • Procedure-based bundled payments for preventive services
  • Diagnosis and treatment planning by episode payment
  • Diagnosis coordination and treatment planning payment (for unusual symptoms and complex cases)
  • Monthly payment to sustain ED capacity
  • Acute condition episode payment
  • Acute condition coordinated treatment payment (for unusual symptoms, complex cases)
  • Bundled payment for initial treatment of chronic condition
  • Monthly bundled payment for long-term care management


These payment models will have key distinctions from traditional fee-for-service or value-based models. Patients choose teams of providers instead of individual providers, and that entire team receives the payment.

READ MORE: 5 Patient Engagement Terms Shaping Value-Based Care

Additionally, these bundles are unique to circumstances, including individual patient characteristics, high-risk factors, or adverse events outside of provider control.

Patient-centered payment models will work because it takes the positive elements of both value-based care and fee-for-service payment. There is no reward for unnecessary services, and no payment if clinicians do not meet the quality measures.

“Standards and outcomes would be based on evidence as to what a Team could achieve for most patients with a particular condition and other characteristics; the outcome standards would be different for patients with characteristics that made good outcomes more challenging, so that higher-need patients were not precluded from receiving treatment,” the report explained.

The model would also be successful because it puts more control back in the hands of patients, payers, and providers, Miller stated. Providers would have the flexibility to design their own bundled and value-based programs, including services rendered and quality metrics.

Patients and payers would see cost transparency in most cases. The entire program hinges on the notion that provider teams create their own prices and quality metrics, within a set of to-be-developed parameters. Patients will know about those requirements to help them make their treatment decisions.

READ MORE: Top Strategies for Collecting Patient Financial Responsibility

Price transparency will falter when patients have a set of unusual or complex symptoms that make it difficult for providers to dictate their costs beforehand. However, there will be regulations within the patient-centered payment system to account for these atypical circumstances.

Miller makes no reservations in stating that creating this payment model will require years of work and development. CMS will need to define patient characteristics that affect outcomes and cost, identify outcomes measure for different patient conditions, and discuss treatment and services for certain conditions.

Providers must form their care teams and determine what care and services they offer, at what level, and for what price.

The development period must be flexible, Miller said, and healthcare professionals must be ready for consistent modifications.

“During the transition period, initial parameters for Patient-Centered Payments will have to be established with the full expectation that they will be modified shortly after implementation begins and then modified again on a rapid-cycle basis for a period of time thereafter,” Miller wrote.

Once implemented, the patient-centered payment system would foster industry competition that may drive down prices. Provider teams will want to improve their patient base by offering the highest quality of care at the lowest possible price, just like all other industries, Miller asserted.

Miller and the Center for Healthcare Quality & Payment Reform advocate for the patient-centered payment system to fill the vacuum they believe fee-for-service and value-based payment structures are leaving. Both models are inadequate for offering healthcare and health insurance access at an affordable rate, Miller stated.

“A better path is to design and implement a Patient-Centered Payment system that is specifically designed to solve all of the problems with Fee-for-Service payment while also preserving its strengths,” Miller concluded.

“Patient-Centered Payment supports patient-centered care, which is what patients want to receive and what physicians and many other healthcare providers want to deliver. But unlike current value-based payment models, Patient-Centered Payment also requires the kind of accountability for cost and quality that both patients and purchasers need and that is feasible for providers to accept.”


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