Thursday, August 25, 2016

Will bundled payments change health?

CMS is changing the way that Medicare and Medicaid pay providers:

The CMS announced a proposal last week to put three new episodes of care under mandatory experiments with bundled payments, potentially compelling hundreds of additional hospitals into becoming financially accountable for what happens to Medicare patients long after they leave the hospital. 

In theory this is supposed to align hospital incentives more closely to the health goals of a patient.

“All those involved in healthcare have always wanted the best for their patients. Providers now have a greater amount of skin in the game and risk in the outcome.”

What could go wrong?


  1. This proposal would cause individuals with Medicare to be turned away from Hospitals that do not want to be financially liable. It would severely limit the number of hospital choices a medicare patient had.

  2. Michael Porter has an interesting article on bundled payments. How do we align incentives with quality and cost? I believe the key to fixing health care is found in the answer to this question.

    From Summary:

    In this article, the authors argue that although capitation may deliver modest savings in the short run, it brings significant risks and will fail to fundamentally change the trajectory of a broken system. The bundled payment model, in contrast, triggers competition between providers to create value where it matters—at the individual patient level—and puts health care on the right path.

  3. CMS’s plan for mandatory bundled payments for heart attacks, coronary artery bypass grafts, and hip/femoral fractures may make it easier for Medicare and Medicaid to pay providers, but that does not mean it is easier for the providers and hospitals having to participate in this plan.

    Adoption of mandatory bundles may provide a framework to provide better care for patients, but does the hospital have the infrastructure in place to handle the change? What additional costs might hospitals incur? If they are responsible for the care after a patient leaves the hospital how does all entities involved get paid? Will the additional bonus on their fee-for-service payments be a big enough incentive to participate in CMS’s plan?

    At the end of the day, a hospital or physician’s office is a business. Of course they want the best for their patients, but when they are faced with programs that complicate how they are paid for the care they provide, it would make sense if they start to turn away patients with Medicare (as Ed Pope commented) or find another way to maximize their profit. If a hospital’s compensation rate for the bundled payments is too high, they could potentially perform unnecessary services. If the rate is too low they may be tempted to perform inadequate care.

    Maybe our country should focus more on a proactive approach to health and wellness instead of a reactive one.

  4. thoughtful comments all. thank you, luke