Health Care Payment in Transition: A California Perspective

Kurt Salmon

The way health care is paid for is changing, and California health care stakeholders can help shape this transformation. This report looks at the state landscape and some payment alternatives.

January 2012

Health care payment systems in California are in transition, pressed by market and economic factors as well as health reform mandates. New payment approaches are emerging while traditional ones still exist. During this transitional period, health care stakeholders including providers, public and private payers, purchasers, and policymakers will be making decisions about the future of payment systems in the state.

This report provides information about the historical context of payment systems in California and the current landscape. It discusses seven common payment models and nine emerging models that have already been implemented, are undergoing experimentation, or are likely to advance in the state. Insights about the evolution of the payment system under health reform include the following:

  • The transition to future payment models will be evolutionary, not revolutionary.
  • There is no one-size-fits-all approach.
  • Large employers and purchasers of health care are likely to have a dominant role in driving payment reform.

Finally, the report discusses considerations and strategies that stakeholders should take into account as they transition to future payment models. These include:

  • Greater collaboration
  • Service line consolidation
  • Robust analytics around a common patient identifier
  • Incentives that align value and effectiveness
  • Impact of the cost of doing business

The complete report is available under Document Downloads.