A Typology of Payment Methods

Research Report

A Typology of Payment Methods

Abstract

Payment reform promises to substitute value for volume, but value- and volume-based approaches typically are implemented together. All payment methods have strengths and weaknesses, and how they affect the behavior of health care providers depends on their operational design features and how they interact with benefit design. Those seeking greater value for their health care dollar are also turning to innovation in benefit design, which typically implements more than one approach at a time. Although payment and benefit design have received significant attention independently, the intersection between the two has received little. The Urban Institute partnered with Catalyst for Payment Reform to explore how established and proposed payment methods and benefit design options work on their own and together. We also examined how payment and benefit design can be blended to improve health care delivery.

In this report, we develop and propose a payment typology that centers on the incentives inherent in payment methods rather than a classification based on the type of provider receiving the payment. This resonates with the desired trend in payment policy toward integrating services and breaking down silos that may be reinforced with provider-specific payments.

Related reports and chapters can be found on our project page.

Research Area: 

Centers

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