"This is a seismic shift," Feinberg said. "It will allow us to stop sending out all the crazy bills. It will be all about what it actually costs to keep you healthy."
He said most hospitals and insurance plans will switch to the new system by the time so-called online insurance exchanges open next year for people who don't receive coverage through their employers.
"Right now, the more patients we have in the hospital, the more money we make," Feinberg said. "Soon, we'll make more money by keeping you out of the hospital."
This is a big deal, and hopefully will result in a more transparent healthcare system that focuses on the smartest use of resources, not on throwing funny money around.