Achieving cost control, care coordination, and quality improvement in the Medicaid program

Abstract

As Medicaid spending rises quickly, controlling cost while coordinating care and improving quality is paramount. Payment method reforms should reward providers that deliver beneficial care but not care of marginal value. This article draws lessons from previous payment reforms and analyzes the potential benefits for Medicaid of 7 specific proposals. The most promising are paying for quality (especially rewarding hospitals that reduce rates of potentially preventable complications and readmissions) and moving away from fee-for-service payment for "medical home" providers. To achieve reform, the article recommends a process characterized by persistence, attention to outliers, consultation, and timing.