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Studies suggest that many hospitalizations of U.S. nursing home residents are inappropriate, avoidable, or related to conditions that could be treated outside hospitals — and they cost over $4 billion per year. But the causes of these hospitalizations are complex. It's a common scenario: a 90-year-old resident of a U.S. nursing home — call her Ms. B. — has moderately advanced Alzheimer's disease, congestive heart failure with severe left-ventricular dysfunction, and chronic pain from degenerative joint disease. She develops a nonproductive cough and a fever of 100.4°F. The night nurse calls an on-call physician who is unfamiliar with Ms. B. Told that she has a cough and fever, the physician says to send her to the emergency room, where she's found to have normal vital signs except for the low-grade fever, a normal basic-chemistry panel and white-cell count, but a . . .

Transitional care has been defined as a set of actions designed to ensure the coordination and continuity of health care as patients transfer between different locations or different levels of care in the same location. Transitional care, which primarily concerns the relatively brief time interval that begins with preparing a patient to leave one setting and concludes when the patient is received in the next setting, poses challenges that distinguish it from other types of care. Many transitions are unplanned, result from unanticipated medical problems, occur in \"real time\" during nights and on weekends, involve clinicians who may not have an ongoing relationship with the patient, and happen so quickly that formal and informal support mechanisms cannot respond in a timely manner. This article describes the challenges involved in and potential solutions for improving the quality of transitional care.

By 2017, the value-based payment modifier will be used to reward or penalize all Medicare physicians on the basis of the relative calculated value of the care they provide. But a physician's overall value cannot be assessed with current or foreseeable measures. Perhaps the only health policy issue on which Republicans and Democrats agree is the need to move from volume-based to value-based payment for health care providers. Rather than paying for activity, the aspirational goal is to pay for outcomes that take into account quality and costs. In keeping with this notion of paying for value rather than volume, the Affordable Care Act (ACA) created the “value-based payment modifier,” or “value modifier,” a pay-for-performance approach for physicians who actively participate in Medicare. By 2017, physicians will be rewarded or penalized on the basis of the relative calculated value of the care . . .

Background: Diagnosis-related group (DRG)-based hospital payment can potentially be inadequately low (or high) for highly variable, highly specialized, and/or low volume care. DRG-based payment can be combined with other payment mechanisms to avoid unintended consequences of inadequate payment. The aim of this study was to analyze these other payment mechanisms for acute inpatient care across six countries (Germany, Denmark, England, Estonia, France, the United States [Medicare]). Methods: Information was collected about elements excluded from DRG-based payment, the rationale for exclusions, and payment mechanisms complementing DRG-based payment. A conceptual framework was developed to systematically describe, visualise and compare payment mechanisms across countries. Results: Results show that the complexity of exclusion mechanisms and associated additional payment components differ across countries. England and Germany use many different additional mechanisms, while there are only few exceptions from DRG-based payment in the Medicare program in the United States. Certain areas of care are almost always excluded (eg, certain areas of cancer care or specialized pediatrics). Denmark and England use exclusion mechanisms to steer service provision for highly complex patients to specialized providers. Conclusion: Implications for researchers and policy-makers include: (1) certain areas of care might be better excluded from DRG-based payment; (2) exclusions may be used to incentivize the concentration of highly specialized care at specialized institutions (as in Denmark or England); (3) researchers may apply our analytical framework to better understand the specific design features of DRG-based payment systems.

This is the definitive work on Medicare's prospective payment system (PPS), which had its origins in the 1972 Social Security Amendments, was first applied to hospitals in 1983, and came to fruition with the Balanced Budget Act of 1997. Here, Rick Mayes and Robert A. Berenson, M.D., explain how Medicare's innovative payment system triggered shifts in power away from the providers (hospitals and doctors) to the payers (government insurers and employers) and how providers have responded to encroachments on their professional and financial autonomy. They conclude with a discussion of the problems with the Medicare Modernization Act of 2003 and offer prescriptions for how policy makers can use Medicare payment policy to drive improvements in the U.S. health care system. Mayes and Berenson draw from interviews with more than sixty-five major policy makers—including former Treasury secretary Robert Rubin, U.S. Representatives Pete Stark and Henry Waxman, former White House chief of staff Leon Panetta, and former administrators of the Health Care Financing Administration Gail Wilensky, Bruce Vladeck, Nancy-Ann DeParle, and Tom Scully—to explore how this payment system worked and its significant effects on the U.S. medical landscape in the past twenty years. They argue that, although managed care was an important agent of change in the 1990s, the private sector has not been the major health care innovator in the United States; rather, Medicare's transition to PPS both initiated and repeatedly intensified the economic restructuring of the U.S. health care system.

Vertical integration has been a central feature of health care delivery system change for more than two decades. Recent studies have demonstrated that vertically integrated health care systems raise prices and costs without observable improvements in quality, despite many theoretical reasons why cost control and improved quality might occur. Less well studied is how physicians view their newfound partnerships with hospitals. In this article I review literature findings and other observations on five aspects of vertical integration that affect physicians in their professional and personal lives: patients' access to physicians, physician compensation, autonomy versus system support, medical professionalism and culture, and lifestyle. I conclude that the movement toward physicians' alignment with and employment in vertically integrated systems seems inexorable but that policy should not promote such integration either intentionally or inadvertently. Instead, policy should address the flaws in current payment approaches that reward high prices and excessive service use-outcomes that vertical integration currently produces.

The Affordable Care Act's financial penalty for “excessive” readmissions may be too weak to overcome the substantial counterincentives currently at work. But a “warranty” payment would provide a stronger business case for hospitals to get with the program. Hospital readmissions are receiving increasing attention as a largely correctable source of poor quality of care and excessive spending. According to a 2009 study, nearly 20% of Medicare beneficiaries are rehospitalized within 30 days after discharge, at an annual cost of $17 billion. 1 Causes of avoidable readmissions include hospital-acquired infections and other complications; premature discharge; failure to coordinate and reconcile medications; inadequate communication among hospital personnel, patients, caregivers, and community-based clinicians; and poor planning for care transitions. Although studies have shown that specific interventions, particularly among patients with multiple medical conditions, can reduce readmission rates by 25 to 50%, 2 the . . .

Proposals to contain health care costs often draw from 1 of 2 primary policy approaches—price regulation or market competition. These approaches are often viewed as in conflict, even though some health economists have long argued that they may be compatible, and desirable, given the unique characteristics of health care markets. Medicare Advantage (MA) markets provide a real-world example supporting the view that provider price regulation and insurance market competition can be complementary.

In US health policy, conventional wisdom holds that market competition and price regulation are mutually exclusive strategies to stem high and rising provider prices. This incorrect assumption centers on the belief that robust competition in US commercial health insurance markets must include provider price competition. Other developed countries, however, commonly implement price regulation to support competition over important care delivery components other than prices, including quality of care and patient choice, and to provide stronger incentives for providers to improve operating efficiency. Conventional US policy wisdom also holds that price regulation inevitably will fail because of excessive complexity or succumb to the interests of regulated entities. This analysis challenges conventional wisdom by urging policy makers to consider regulations that limit out-of-network provider prices and establish flexible hospital budgets. Each of these proposals would require less administrative complexity and burden than other proposed approaches. We conclude that it is time to move discussions from whether to regulate hospital prices to determining how best to do so.

A substantially improved, carefully managed Medicare Physician Fee Schedule could pave the way to more fundamental value-based payment reform and improve performance among physicians, who are likely to be paid according to fee schedules for the foreseeable future. “Moving from volume to value” is health care reform’s latest mantra. Policymakers hope to replace fee-for-service systems with value-based approaches that reward improved outcomes achieved at lower cost. Ground zero in these efforts is the Medicare Physician Fee Schedule (MPFS). What payment reformers often fail to recognize is that the specific MPFS payment rates have important implications for Medicare and its beneficiaries. The relative payment levels for the thousands of service codes and the absence of payment for other activities powerfully influence how physicians spend their time — and their tendency to perform unneeded tests and procedures. The mix of . . .