A recent piece in JAMA highlights the fact that bundled payments incentives involving shared savings bring down the cost of the bundle. Med City News noted the fact that this conclusion runs counter to the perspective of the Secretary of HHS nominee, Tom Price.

Incentive programs such as this are commendable because they do tend to focus attention on quality, cost and efficiency. My concern is that they are of limited scope and that they may tend to have only short-lived effects.

The observational study looked at patients served at one medical center now that a new mandatory comprehensive care for joint replacement bundled payment program is being piloted around the country. The authors note that the earlier Acute Care Episode (ACE) and Bundled Payments for Care Improvement (BPCI) programs weren’t looked at closely enough.

Bottom line, the study found that the bundled payment program saved a significant amount per patient with no reduction in quality.

But questions remain: What is the long term effect of such change? How generalizable is it? Are there better options?

Once changes are implemented and savings are normalized, in future years the provider organization will simply be paid less and will not be eligible for a shared savings payment. How will quality fare in that circumstance? How significant a part of the equation is the fiancial incentive to the providers?

Other questions to consider would include: Is there a selection bias present with respect to the patients served in the bundled payment program? Are they healthier than average?

Is a focus on bundles the best way to go, versus a focus on population health? I think that we ultimately need a combination of payment models, rather than trying to fit a single approach to a complex system. However, each payment system needs to be optimized in order to optimize the whole on a system-wide basis.

Here’s hoping that CMMI survives the transition this month so that we may continue to experiment and learn more about what works best.

I’ll close with a quote from a post I wrote after the 2012 election which still holds true today:

The goal for all of us in health care these days is to be better integrated with other parts of the system, so that we can do more with less in the future. We all know — or should know by now — that we will have to do more with less. The key to future success will be managing patients’ care and its attendant costs over the long term, managing an episode of care that extends beyond an inpatient surgery to encompass pre-admission and post-discharge services, managing a chronic condition with a multidisciplinary approach using medicine, nursing and even social media and game theory to motivate patient behavior modification. We need to move from reimbursement-based medicine to evidence-based medicine.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

Image credit: Images Money via Flickr CC

One reply on “Bundled Payments: Panacea, Perdition or Something In Between?”

  1. I wonder if we will see more and more bundled payment services in the future. This story is very interesting as it relates to a few of the trends that we are seeing in the healthcare arena; there will be some major changes to the industry over the next few years.

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