Bundled Payments - A Prix Fixe Menu for Healthcare

Sutherland Editorial

The idea, which has been around since the 1980’s, is a simple way of spreading healthcare costs and risk, while increasing accountability. It reimburses health providers on the basis of expected costs for a clinically-defined episode of care. For instance, a bundled payment for joint replacement might cover surgery, post-op hospital care and outpatient rehab services.

The payment is shared, on a pre-agreed basis, with all the providers involved. Any surplus or cost overrun is also shared. It’s a system intended to improve coordination between physicians, hospitals, rehab facilities, and home care agencies.

The jury, however, is still out on whether the industry is enthusiastic for bundled payments. A 50% provider dropout rate suggests that some voluntary participants prefer to leave the system when not doing well, rather than look to improve care delivery. On the other hand, some healthcare professionals believe the cardiac and orthopedic bundled payment models are pushing hospitals to improve treatment plans.

What is very clear at this stage is that the concept of bundled payments has not been given a chance to either succeed or fail. It’s far too soon to be pulling the plug on the idea, especially for clearly ideological reasons.

A report in last month’s Journal of the American Medical Association suggested that expanding bundled payments would achieve the “Triple Aim” of better care for patients, reductions in Medicare payments, and increased profits/payments to hospitals and physicians.

In particular, it advocated extending the duration of bundles, enabling them to embrace the full spectrum of acute and chronic care, thereby supporting longer-term population health strategies.

Critical to any expansion of bundled payment are robust data analytics programs but what incentive is there for a healthcare provider to invest in such systems when the future of the reimbursement process itself is in doubt?

A study released this week by Harvard's Chan School of Public Health, based on the Centers for Medicare & Medicaid Services (CMS) data, shows that people enrolled in Medicaid are overwhelmingly satisfied with their care, contrary to the claims of many opponents of the ACA.

The connection to bundled payments fate hanging in the balance? Both are symptomatic of the very dangerous tendency to place America’s healthcare firmly in the crosshairs of ideological diktat. It’s time for all patients and politicians to see the bigger picture when it comes to bundled payments so the industry can begin to transition away from the fee-for-service model!