Providers Clamoring to Participate in Bundled Payment “Test”

In yet another blow to traditional fee-for-service medicine where doctors and hospitals are paid for each service provided, the Obama administration says more than 500 hospitals and related health care organizations have agreed to “bundled payments” as part of a three-year test. Interestingly, it seems that care providers of all types are clamoring to participate, despite the fact that some experts suggest the new “formula” may ultimately have a negative impact on their wallets.

Don’t believe it. All things considered, a well-conceived bundled payment scheme should be a “winner” for everyone.

Bundled payments relate to the total cost per episode of care –a fundamentally different approach. For patients whose conditions require multiple office visits across a number of specialists, the bundling of payments should not only yield a noticeable improvement in the level of care coordination/organization received, but basic questions about costs should be dramatically simplified –for everyone.  It also stands to reason that a well-coordinated care network could handle more patient volume. “The objective of the initiative is to improve the quality of health care delivery for Medicare beneficiaries, while reducing the program expenditures, by aligning the financial incentives of all providers.”

Although it’s considered a three-year “test,” it is not likely to go away any time soon. For example, the private sector is already providing bundled payments. Insurance companies like UnitedHealth Group (UNH), Humana (HUM), Aetna (AET) and most Blue Cross and Blue Shield plans are already making bundled payments to groups of doctors and hospitals.

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The Kaiser Health News  compiled  a few good and recent stories (below) on the topic together. Check them out.

Modern Healthcare: More Than 450 Provider Organizations Joint Payment-Bundling Initiative:  The CMS on Thursday announced that more than 450 health care organizations will participate in the Bundled Payments for Care Improvement initiative, a payment model program created in the health care reform law to test whether bundling payments for services in a single episode of care can improve quality and lower costs. Those selected organizations represent a wide range of healthcare providers — including not-for-profit and for-profit hospitals, academic medical centers, physician-owned facilities and post-acute providers — that were chosen by the CMS either as awardees for Model 1 starting in April, or as participants for the first phase of models 2, 3 and 4 that begins with Thursday’s announcement.

CQ Healthbeat: Federal Officials Approve Applications For Bundled Payment Initiative:  More than 500 health care organizations will participate in the Department of Health and Human Services’ bundled payments initiative, the agency announced Thursday. This effort will test whether paying groups of providers a lump sum for a patient’s treatment will lower costs without undermining the quality of care.

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—Tom Finn

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