Last week’s announcement by the Center for Medicare and Medicaid Innovation – a.k.a. The Innovation Center – about the launch of the Bundled Payments for Care Improvement Initiative offers hope in the battle against out-of-control health care costs. Doctors, hospitals, and other health care providers can apply to participate in this new initiative, which will test four different models of paying for services delivered across an “episode of care.”
What’s this all about? Mostly, it’s about shaking up the status quo in the way we pay for health care services. Today, most health care is paid for on a fee-for-service basis. Under this system, doctors, hospitals and clinics are paid “a-la-carte” for care, meaning that they get paid for each individual service they provide — a lab test, an office visit, an MRI – without regard to whether the patient’s health improves. This system gives providers full decision making power, along with the financial incentive to order whatever services they choose regardless of efficacy or expense. The incentive also tends to undervalue lower-paying services such as primary care and important patient supports such as care coordination, home visits, and 24/7 access .
The new initiative seeks to change the status quo by paying providers a fee for all the services a patient receives over the course of an “episode” of care, for example, a hip replacement, rather than paying each provider separately for every service related to the episode (e.g. inpatient stay, lab tests, post-discharge services). The Innovation Center spelled out four models it wants to test. These models vary in terms of episode length, services in the bundle and payment type.
The idea of bundling payments gained traction during the health reform debate primarily based on the experience at Geisinger Health System, a health system out of Pennsylvania (and where it should be noted, the head of The Innovation Center used to work). Years ago, Geisinger launched an episode-based care model for its heart bypass patients. Under this program – called “ProvenCare” – the health system calculated the total cost for all of the preoperative, post-operative and rehabilitation services associated with bypass surgery and paid providers this price. It also created new systems to ensure that doctors were following best clinical practices for the surgery. As a result of implementing this program, there was a 21 percent reduction in all complications from the surgery, a 25 percent reduction in surgical site infections and a 44 percent decrease in hospital readmissions. Geisinger has since expanded this program to other episodes of care such as hip replacement surgery, cataract surgery, obesity surgery, prenatal care for babies and mothers, and heart catheterization.
While the results of this new initiative are still a few years away, bundling payments clearly represents a step toward better care at lower cost. If done well, it will improve the quality of care by encouraging coordination and the use of care management services, such as transition planning, home visits or social service supports. However, if done without strong measures of transparency and accountability for improved quality, it could be a failed experiment. Advocates have a unique role to play in ensuring that the voices of patients and their families are represented in shaping this program, especially in making sure the right quality measures are used.
Given the current pressures in Washington and in the states to reduce health care costs, we hope this bundling program results in lower costs and better care, making it a true bundle of joy.
— Renée Markus Hodin, Project Director