Concerns about rising health care costs and low quality have prompted some public and private payers to adopt new ways of paying for health care services. These initiatives aim to reward doctors and hospitals that provide high-quality, high-value care, thereby better aligning providers' financial incentives with patients' health outcomes. The new payment models described in this brief include shared savings, payments to patient-centered medical homes, bundled payments, and global payments. While these new models have the potential to encourage care coordination, improve quality and control costs, there are many challenges in implementing them. These include obtaining provider buy-in, implementing new performance measurement and reporting systems, and establishing effective risk adjustment. More broadly, because many of the new models are being implemented by adjusting fee-for-service payment rather than replacing it, their potential to be truly transformative may be limited. The success of new payment models will depend in part on identifying and incorporating lessons learned by early adopters.
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