Facilitators and Barriers to Payment Reform

Market-based, governmental, organizational, and design considerations

Most health care in the United States is paid for under the fee-for-service method. This is an unsustainable payment approach that rewards a high volume of services over quality, value, and health outcomes. Many believe this form of payment is a major contributor to the rising costs of health care.

Various payment reform efforts underway across the United States are testing other methods of paying for health care services, in pursuit of lower costs and higher quality. From market forces to the design of the payment innovation, many different factors can affect the success of a payment reform effort. But what community characteristics help reform efforts along, and what are the obstacles to success?

This issue brief draws upon the experience of Robert Wood Johnson Foundation grantees and other initiatives to identify the most common facilitators and barriers to payment innovation. The brief draws on the experiences of a diverse group of innovators, including quality improvement organizations, Aligning Forces for Quality alliances, provider groups, and a state government body. It is intended to inform providers, employers, and other parties interested in undertaking or supporting a payment reform effort. 

The facilitators of and barriers to payment reform in this issue brief are organized into the following four categories:

  1. Market-based: the composition and qualities of the marketplace, including qualities of key market participants (e.g., payer, provider, and purchaser); 
  2. Governmental: the role of the state as a convener of payment reform, a regulator of health care, and/or a purchaser of health care;
  3. Organizational: the characteristics of the organization(s) leading or simply participating in the effort, including its internal structure and external influence; and
  4. Design: the construction of the payment model itself, including its characteristics, relative complexity, and potential impact.

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