Payment Reform In Health Care

The Alliance^®aims to establish payment reform in health care by aligning financial incentives that reward providers for high-quality care using a Total Cost of Care model, where 100% of the care provided to a patient is considered when analyzing reimbursements. This helps us identify patterns of overuse and inefficiencies in the health care system that remain hidden in a fee-for-service model. We turn those inefficiencies into data included in our Smarter Health^SM analysis, which can be used to help guide individuals towards higher-quality care that saves them and their employer money. This model also moves the risk traditionally born by employers for inefficient care or medical errors onto health systems; its promise is to identify cost-saving opportunities by system so we can reward provider partners that deliver the most cost-effective care to our employees and their families.

Achieving payment reform in health care by creating the right incentives for care delivery is the platform upon which The Alliance was built. We’ve used our strength in numbers to pursue unique contract provisions that protected our members and their employees from unexpected charges. And we are building on that foundation to include a focus on cost and quality transparency to continue the payment evolution.

Real Payment Reform in Health Care

Reference-Based Contracting by The Alliance^®

We’ve implemented Reference-Based Contracting by The Alliance (or Medicare-based pricing) in over 80% of our contracts. This is important because Medicare is the single largest purchaser of health care in the US and has established base rates for various services, and they adjust them by provider to factor in geography, patient mix, and quality metrics.

Reference-Based Contracting by The Alliance provides the benchmark we need to pay a fair price for services, rather than simply focusing on a savings of total charges. Paying providers a percentage of Medicare not only gives us an appropriate benchmark by which we can measure relative value, it also enables employers to use plan design to incentivize employees to utilize low-cost, high-quality providers.

Changing incentives will cause disruption in our health care system, and ultimately improve the quality of care, expand access to care, and reduce the cost of care for both employers and patients.

QualityPath^®& Bundled Payments

The Alliance offers QualityPath as a customizable, high-value health care option for our members. QualityPath identifies physicians and hospitals that meet proven standards for delivering high-quality, fairly priced care for selected procedures, and offers a warranty that protects patients against the high costs of complications or repeated tests due to quality issues.

We also offer bundled payments for a select set of services, which simplifies pricing by packaging all the elements of a surgery or test together into one price. We continue to grow these two programs, which gives our members comprehensive and coordinated care while understanding the prices of the care they are receiving.

Featured Insights on Payment Reform

Three Alternative Payment Models Reducing Cost and Improving Care

By Deb Kunferman | Feb 13, 2023 | 3 min read

Traditionally, healthcare has been paid with a fee-for-service model where providers are paid separately for each service provided. This model can make it difficult for patients and healthcare payers to estimate the total cost prior to seeking care. But alternative...

5 Ways Self-Funded Employers Can Change the Cost of Healthcare

By Mike Roche | Jul 12, 2022 | 3 min read

As a trusted, objective partner for more than 300 self-funded employers and their consultants, The Alliance is improving access to high-value healthcare for more than 105,000 lives – and we’ve been doing it for more than 30 years. Our vast experience with...

5 Key Takeaways from RAND Corp’s Hospital Price Transparency Study

By Melina Kambitsi, Ph.D. | May 31, 2022 | 3 min read

The importance of hospital price transparency has come to the forefront for payers once again. Employer-sponsored health plans cover roughly half of all Americans, account for $480 billion in hospital costs, and their cost has outpaced wages and inflation for more...