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Hospital Payment Systems: Will Payers Like the Future Better than the Past?

January/February 2006
Health Affairs, Vol. 25, No. 1
Len M. Nichols, Ann S. O'Malley

Unsustainable health care cost growth has forced payers to reexamine goals for hospital payment systems. Employers want simplicity and transparency, with comparative performance data available in the public domain. Insurers favor simplicity but prefer to keep the analysis of comparative performance data and pricing private. Thirty five pay-for-performance experiments have been devised in the private sector, to reward hospitals for higher quality and move toward more effective payment systems. Definitive results are not yet known, and caveats remain, but early signs are promising. This paper develop three scenarios for future hospital payment systems and identify policy actions to improve outcomes.

For a full copy of this article please visit the Health Affairs Web site. (Subscription required.)


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.