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Episode-Based Payments: Finding A New Way to Pay for Quality Care

Janice Simmons, for HealthLeaders Media, January 21, 2010

Probably the simplest approach would involve identifying providers responsible for an episode of care—holding all of those delivering care within an episode jointly responsible for the patient's outcomes. This means payers would continue to pay each provider using fee for service templates but provide bonuses—or repayment of withholds—based on how care was provided for that episode and its quality results.

Attention also would have to be paid on how episode-based payments would interface with new types of care delivery such as accountable care organizations (ACOs). "Although some perceive episode based payment and ACOs as competing payment reforms, pursuing them simultaneously could be viewed as hedging bets on payment reform success," the researchers said.

ACOs and episode based payments could work together, they said. Episodes-based payments could be included in the calculation of total payments per enrollee. This could then be compared to benchmarks to determine rewards or penalties for ACOs.

For the most part, payment reform received a short shrift in the healthcare reform debate. While many questions still surround episode-based payments, they show promise in terms of promoting quality care. Now may be the time to open new horizons on paying for health services.


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Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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