Review 1984 Blue Cross-Blue Shield cost control.
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Is pay for performance (P4P) motivated by cost savings or the quest for quality care? The answer depends on whose P4P program is being discussed.
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Clinical resources represent the major items of expense in hospital care. These resources are under the primary control of physicians. For a number of reasons it is difficult to manage these resources in the sense of ensuring their prudent use under all circumstances. Relevant clinical information brought to bear at the time and place of the decisions which allocate these resources can encourage prudent use directly (through reduction in waste) and indirectly (through improving the quality of care).
OBJECTIVES: The purpose of this study was to determine whether reimbursement in direct proportion to expected therapeutic benefit is capable of improving the utilization and cost of health care. BACKGROUND: The benefit associated with a particular medical or surgical treatment varies widely from patient to patient. Nevertheless, payment to the provider of the treatment is essentially invariant under the current fee-for-service system. Under an alternative fee-for-benefit strategy, empiric data are used to construct a multivariate model to predict the expected benefit to an individual patient from a particular health care service on the basis of conventional clinical descriptors. The payers and the providers of the service then openly negotiate an explicit economic relation between expected benefit and monetary payment such that payment is directly proportional to benefit. METHODS: Computer simulations were performed to determine the potential impact of this fee-for-benefit strategy with respect to medical versus surgical treatment of coronary artery disease. RESULTS: Compared with conventional fee-for-service, fee-for-benefit resulted in a 12% improvement in patient benefit (quality-adjusted survival), a 22% reduction in provider payments and a 55% increase in cost/benefit (the ratio of benefit to payment). CONCLUSIONS: The incentives embodied in a fee-for-benefit strategy can be an effective mechanism for encouraging more appropriate health care utilization while simultaneously controlling health care costs.
Specific steps are suggested to cope with the variable costs of diagnostic examinations and film use. More importantly, fixed costs which constitute most of the expenses in radiology, should also be controlled. Since nonphysician salaries are a large part of fixed costs, factors which affect productivity must be investigated and understood. Unfortunately, current regulatory and reimbursement procedures thwart efforts to improve productivity and control expenses.
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