By NextBestFitFee-for-service at public fee schedule
Keep paying per service, but at national rates (like Medicare or Japan's fee schedule).
Physicians and clinics paid per service at a national fee schedule; rewards productivity and short waits.
To review: Encourages volume; compare with capitation for primary care.
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This path
Fee-for-service at public fee schedule
Requires:
All-payer rate settingU.S. prices are far higher than in other countriesChosenConcrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Set one national fee schedule
- Revise fees every two years
- Add volume controls by specialty
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- U.S. prices are far higher than in other countries
National fee schedules retain payment per service, rewarding productivity and supporting shorter waits while fixing the rates paid.
- Longer waits if demand grows faster than capacity
Retaining payment per service rewards productivity and supports shorter waits.
What it creates or worsens
- Low-value care and overtreatment
Payment per service continues to encourage greater service volume even with fixed national rates.
10 paths soften this
Evidence-based coverage decisionsLow-value care and overtreatmentChosenFeedback and clinician nudgesLow-value care and overtreatmentChosenModest copays with an income-based annual capUnderinsurance: covered, but can't afford to use itRejectedValue-based cost sharingUnderinsurance: covered, but can't afford to use itRejectedGlobal budgets for hospitalsU.S. prices are far higher than in other countriesChosenNo-fault compensation for medical injuryMalpractice system: slow, costly, and drives defensive medicineChosenNational health record and patient IDRecords don't follow patientsChosenSeparate public capital budget, planned regionallyUnder-investment in equipment and facilitiesChosenAccept somewhat slower adoptionSlower access to new drugs and technologyRejectedOnly flat, small charges on a few servicesCopays keep billing systems alive and still deter poorer patientsRejected - Solves only part of the problem
Payment per service at national rates still requires billing.
Who's affected
Who gains
- People with employer coverage
- U.S. prices are far higher than in other countries: Private plans pay the highest prices, passed on through premiums.
- Longer waits if demand grows faster than capacity: They are seen fastest today and would share one queue with everyone.
- Taxpayers and public budgets
- U.S. prices are far higher than in other countries: Public programs pay more than peer countries too.
- People with ongoing or specialist care needs
- Longer waits if demand grows faster than capacity: They need specialists and procedures most often.
- Hospitals, clinics, and care organizations
- Low-value care and overtreatment: Per-service payments reward additional low-value care.
- Drug and device makers
- Low-value care and overtreatment: They sell devices and tests used in low-value care.
Who loses
- Hospitals and specialist groups with high private prices
- U.S. prices are far higher than in other countries: Providers with pricing power earn more per service.
- Drug and device makers
- U.S. prices are far higher than in other countries: U.S. prices are well above those in peer countries.
- People with ongoing or specialist care needs
- Low-value care and overtreatment: Low-benefit tests and treatments expose them to harm.
- Health insurers, brokers, and their shareholders
- Low-value care and overtreatment: They pay for tests and treatments with little benefit.
- Taxpayers and public budgets
- Low-value care and overtreatment: They pay for tests and treatments with little benefit.
Where it has been tried
- Japan, Taiwan: Fee-for-service at national rates, with volume controls in Taiwan.
- Taiwan: In 2023, Taiwan's hospital sector recorded 602 billion medical payment points, or 68.0% of points in the national global-budget payment system.
Works well with
Other paths for “U.S. prices are far higher than in other countries”
All-payer rate settingU.S. prices are far higher than in other countriesChosenCap commercial prices at a multiple of MedicareU.S. prices are far higher than in other countriesChosenRestore competition and leave prices to marketsU.S. prices are far higher than in other countriesRejectedGlobal budgets for hospitalsU.S. prices are far higher than in other countriesChosenCapitation for primary care and integrated systemsU.S. prices are far higher than in other countriesChosen