The nation’s two largest private health insurers, UnitedHealth Group and Wellpoint, have recently decided to change the way they pay physicians and in some cases the way their network hospitals are paid. It is about time. America’s traditional medical payment system, fee-for-service, based on a labyrinth of codes and procedures and slowly adjusting arcane price schedules, has been broken for decades. Fee-for-service medicine, backed up for more than forty years by the federal government and its two biggest programs Medicare and Medicaid (also partly funded by the states), rewards volumes of medical services that drives up spending, and it thwarts coordination of care that can make healthcare more effective and less expensive.
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