Priority Area 10: Demand Quality and Efficiency from the Health Care System

The American health care system is the most expensive in the world. While delivering technically excellent care in many instances, it also has tremendous documented failures, including overuse of certain procedures, poor management of chronic conditions, excessive and duplicative use of diagnostic tests, avoidable errors that lead to harm and death, and expensive, wasteful administrative processes. In that context, it is imperative that all of the forces of health reform align to squeeze out waste so resources can go toward the unmet needs so many people have and back into the pockets of families and businesses that have far better uses for their limited funds.

Health reform provides states with a broad array of new tools for improving the quality and efficiency of the health care system. These tools include pilots for the establishment of pediatric accountable care organizations, the promotion of medical homes for people with chronic conditions, demonstrations on bundling payments for hospital, post-acute and physician services, and the broad authority embodied in the Center for Innovation.

Far beyond these specific demonstration programs, states have the ability to align the purchasing power they have within Medicaid, CHIP, public employees and retirees, and the new exchange. That leverage, used in conjunction with Medicare and private purchasers, can, through payment reform, benefit design, using data, and setting ambitious population health goals, yield changes in how health care is delivered. Leading states already have in place public and private partnerships that are using payment reform, transparency with respect to price and quality, and other tools to achieve targeted improvements in health system performance.