How to Get Payment Reforms Right

Right now, policymakers and payers are chasing an elusive target: how to pay for health care based on cost and quality, rather than quantity, as much of health care is today.

The goals in this pursuit are admirable: healthier patients and a stronger health care system. America’s biopharmaceutical companies share these goals and are working every day to improve outcomes for patients so that they can live longer, healthier lives. But this is uncharted territory, and reforms must be crafted carefully to ensure quality of care, quality of life and access to the newest and most innovative treatments aren’t sacrificed for short-term cost savings.


New payment models must recognize patients are not average. They are individuals with unique needs, genetics and circumstances. Individuals may not prioritize trade-offs between outcomes, costs, side-effects and quality of life in the same way. Patients need choices when it comes to providers and treatment options and their providers should never be penalized for engaging a patient in shared, well-informed decision making and providing the most appropriate treatment for that individual patient.


For these reasons, it is critical policymakers developing and testing new payment models use a transparent process that encourages input from patients, providers and other stakeholders. Successful reforms should also adhere to the following four core tenets to ensure they accommodate individual patient needs and that high quality care is not sacrificed:


  1. Reforms should be based on the full range of patient care, recognizing patients are more than their disease. 
    If reforms do not consider the full continuum of patient care, they may encourage use of treatments that are right for the average patient but not for everyone. For example, cancer is now considered by researchers to be over 200 distinct diseases, and treatment is increasingly targeted based on specific genetic factors. Not all patients respond the same way to treatment, so payment reforms must be structured to incentivize quality of care overall and not just use of specific treatment regimens.


  1. Reforms should include quality measures that are meaningful to patients and support continued improvement in health outcomes and care quality.

A number of health care stakeholders and experts have called for greater reliance on outcomes-driven measures, including patient reported outcomes to help ensure the use of clinically appropriate treatment options. Using these kinds of quality measures will help ensure reforms are meeting the needs of patients.


  1. Reforms should incorporate mechanisms to support patient access to a full range of treatment options and medical advances.

Real reforms need to account for the cost of new advances that improve patient care and long-term outcomes, but may be more expensive in the short term. Medicare currently follows this model, and it should remain a part of any new payments models.


  1. Reforms should be based on the best clinical evidence.

Pathways, guidelines and value frameworks are often used as tools to define value-based care. Reforms relying on these tools must support informed physician-patient decision making from the range of treatment options available and based on well-researched, methodologically rigorous evidence.


Reform – Washington’s word for “change” – is never easy. But careful payment and delivery reforms have the potential to improve the quality of patient care while reducing overall health care costs. We must ensure change is made responsibly, without jeopardizing patient care.

John J. Castellani

Morning Consult