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Bundled payments
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In healthcare, bundled payment is a method of reimbursing physicians for healthcare services, used by some third-party payers instead of the traditional fee-for-service reimbursement model. Under a bundled payment model, a group of doctors and hospitals together receives a lump sum to cover all services associated with the treatment of a condition—rather than receiving separate payments for each service provided.
Medicare established multiple programs to test bundled payments, including the Bundled Payments for Care Improvement (BPCI) Initiative and the Comprehensive Care for Joint Replacement (CJR) program. The BPCI Initiative was introduced in 2013 as a voluntary program for providers; the CJR program began on April 1, 2016, as a mandatory program. Two other programs slated to begin in 2018 were cancelled in August 2017.
Overview
In healthcare, bundled payments are a reform of the traditional fee-for-service reimbursement model. When a third-party payer, such as an insurance company or Medicare, adopts a bundled payment model, a group of doctors and hospitals together receives a lump sum to cover all of the services associated with the treatment of a condition (also called an "episode of care"). This can also include post-procedure care, like physical therapy after a hip replacement, for example. Under fee-for-service, by contrast, doctors and hospitals are paid separately for each service provided.[1]
The amount of the payment is based on an estimate of the total cost of care for a condition. This includes all of the practitioners involved (for example, nurses, anesthesiologists, and surgeons), settings of care (like hospitals and doctor offices), and the services and procedures provided over the course of the condition. Reimbursement via bundled payment places some financial risk on providers, since the payment is not adjusted if the cost of care is higher than expected or if a preventable complication arises. However, if the group of providers manages to treat a condition at a lower cost than expected, the group gets to share in the savings with the payer.[1][2]
According to Catalyst for Payment Reform, just 0.1 percent of healthcare reimbursements from private insurers were in the form of bundled payments in 2014. In the public sector, the Centers for Medicare and Medicaid Services established two programs to test using bundled payments for Medicare reimbursements: the Bundled Payments for Care Improvement (BPCI) Initiative, a voluntary program, and the Comprehensive Care for Joint Replacement program, a mandatory program for physicians in select cities. According to the health policy journal Health Affairs, Medicare's move toward mandatory bundled payments was significant:[2][3][4][5]
| “ | Other payers are also experimenting with bundled payments, but as a national program with more than forty-five million beneficiaries, Medicare is a primary driving force behind change in the health care arena. Therefore, the design and structure of the BPCI initiative are particularly important as they will likely influence how other payers approach episode-based payments.[6] | ” |
| —Health Affairs[5] | ||
CMS planned to expand mandatory bundled payments in 2018 with two programs, the Episode Payment Model and the Cardiac Rehabilitation program. On August 17, 2017, CMS proposed canceling the two programs and rolling back the Comprehensive Care for Joint Replacement program.[7]
Support and opposition
Support
IN 2010, the RAND Corporation published an analysis of bundled payments, finding that the model had the potential to reduce costs and curb rising healthcare spending. The report posited that the dominant fee-for-service model, under which providers are paid separately for each service rendered, provides little incentive to physicians to limit unnecessary care. The Health Care Incentives Improvement Institute also argued that fee-for-service is one of the primary drivers of an excessive use of healthcare. Conversely, under a bundled payment model, the RAND report stated that providers instead would have an incentive to eliminate unnecessary services in order to get the most out of the payment. Different providers would also have the incentive to better coordinate care and use resources more efficiently. Together, these factors would reduce costs for payer and slow overall healthcare spending, according to the report.[8][9]
Additionally, in an opinion piece published in STAT by Susan DeVore, CEO of healthcare consulting company Premier, Inc., DeVore argued that bundled payments improve the quality of care. DeVore contended that bundled payments—especially programs that provide bonuses based on quality—incentivize multiple providers to "collaborate across settings and specialties." This reduces inefficiencies and leads to better exchange of patient information between care settings. This kind of coordinated and collaborative care can cut down on duplicate testing and post-care complications. As a result, health outcomes and the overall patient experience are improved, according to DeVore.[10]
Opposition
An opinion piece published in KevinMD.com, a physician blog, compared bundled payments to other capitation models of reimbursement, such as health maintenance organizations. The piece argued that bundled payments would reduce the quality of care delivered by providers because under a bundled payment model, providers make less money if they provide more care and make more money if they provide less care. Sally Pipes, president and CEO of the Pacific Research Institute, similarly argued that bundled payments could incentivize the underuse of healthcare services, including those that are appropriate and may be beneficial. In other words, bundled payments could discourage appropriate care if it would push the cost of services beyond the bundled payment amount. Pipes asserted that the model would limit access to care for "vulnerable patients who may be at higher risk of developing expensive complications." These effects would result in lower-quality care and poorer health outcomes for patients.[11][12][13]
Additionally, the Heritage Foundation argued that bundled payments may not reduce healthcare costs. The organization posited that instead of providing too many unnecessary services, providers may treat too may unnecessary episodes of care. In this case, a doctor could overstate the severity of a condition if the bundled payment for that condition is financially attractive.[13][14]
Recent news
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See also
External links
- Catalyst for Payment Reform
- Health Affairs Blog, "The Payment Reform Landscape: Bundled Payment"
- National Conference of State Legislatures, "Episode of Care or Bundled Payments"
- Health Affairs, "Health Policy Briefs: Bundled Payments for Care Improvement Initiative"
- RAND Corporation, "Analysis of Bundled Payment"
Footnotes
- ↑ 1.0 1.1 Health Affairs Blog, "The Payment Reform Landscape: Bundled Payment," July 2, 2014
- ↑ 2.0 2.1 National Conference of State Legislatures, "Episode of Care or Bundled Payments - Health Cost Containment," accessed April 27, 2016
- ↑ Catalyst for Payment Reform, "National Scorecard on Payment Reform," accessed April 27, 2016
- ↑ The Advisory Board Company, "It's official: Mandatory bundled payments are coming. Here's what you need to know," November 17, 2015
- ↑ 5.0 5.1 Health Affairs, "Health Policy Briefs: Bundled Payments for Care Improvement Initiative," November 23, 2015
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ U.S. Department of Health and Human Services, "Medicare Program; Cancellation of Advancing Care Coordination through Episode Payment and Cardiac Rehabilitation Incentive Payment Models; Changes to Comprehensive Care for Joint Replacement Payment Model," August 18, 2017
- ↑ RAND Corporation, "Analysis of Bundled Payment," accessed April 28, 2016
- ↑ Health Care Incentives Improvement Institute, "Fee for Service (FFS)," accessed August 18, 2017
- ↑ STAT, "Medicare 'bundled payments' improve health, save money," April 18, 2016
- ↑ KevinMD.com, "Bundled payments means the death of quality medical care," September 30, 2015
- ↑ The Orange County Register, "Bungled bundling of hospital payments for joint replacements," August 27, 2015
- ↑ 13.0 13.1 MiraMed, "Bundled Payments Building Momentum," March 16, 2016
- ↑ The Heritage Foundation, "Overcoming Challenges to Physician Payment Reform in a Post-SGR World," March 16, 2016
