Can paying for 'episodes of care' cut health costs?

From RAND

Even as Congress and the White House wrangle over an array of reform proposals in Washington, there's tons of tough cogitating going on by smart folks nationwide about how to cut the costs and to improve the results of health care in this country. Some of the fixes that are developed may be incremental and still important, such as a proposal by researchers in Santa Monica to figure a better way to handle common, recurring health situations like hip replacements or diabetes care. Currently, providers rack up fees for  each and every procedure they undertake in these situations. But why not, instead, pay one previously negotiated and agreed upon amount for certain "episodes of care?" While this approach holds promise for reducing paperwork, bureaucracy and complexity, lots of nitty-gritty stuff needs to be worked out for it to work, researchers say.

Many details found to be unresolved in promising proposal to cut health costs