Purpose: To survey the policy-driven financial controls currently being used to drive physician change in the care of populations.
Design/methodology/approach: This paper offers a review of current health care payment models and discusses the impact of each on the potential success of PHM initiatives. We present the benefits of a multi-part model, combining visit-based fee-for-service reimbursement with a monthly "care coordination payment" and a performance-based payment system.
Findings: A multi-part model removes volume-based incentives and promotes efficiency. However, it is predicated on a pay-for-performance framework that requires standardized measurement. Application of this model is limited due to the current lack of standardized measurement of quality goals that are linked to payment incentives.
Practical implications: Financial models dictated by health system payers are inextricably linked to the organization and management of health care.
Originality/value: There is a need for better measurements and realistic targets as part of a comprehensive system of measurement assessment that focuses on practice redesign, with the goal of standardizing measurement of the structure and process of redesign. Payment reform is a necessary component of an accurate measure of the associations between practice transformation and outcomes important to both patients and society.