The healthcare industry is undergoing a transformation of historic proportions. Our task is to reduce healthcare costs and improve the quality of care. The industry is not short on ideas aimed at accomplishing this feat, but determining which initiatives will prove effective is a challenge.
One initiative garnering significant press focuses on a revised Medicare reimbursement model known as “bundled payments.” Will the concept of bundled payments prove to be an enabler of change or yet another reimbursement fad for the industry?
A scary fact - nearly 18 percent of Medicare patients are readmitted within 30 days of their initial hospitalizations. According to President Obama’s budget projections, reducing the waste associated with Medicare readmission rates through bundled payments and quality care could save $26 billion over the next 10 years. Will bundling payments really fix this issue?
Bundled payments would provide a set payment amount for both the hospital and physician in the treatment of a condition. Pilot projects are underway now focusing on orthopedic and cardiac cases. Each constituent providing service would be allocated a portion of the overall payment to be distributed by the hospital. The idea is to promote coordination amongst physicians and hospitals in an effort to reduce costs and improve the quality of care.
Under traditional reimbursement models (e.g., fee-for-service or discounted fee-for-service), providers (hospitals and physicians) are paid individually for the services rendered. Critics argue the fee-for-service model promotes quantity, not quality, of care.
Physicians and hospitals do not share the same financial burden related to managing the cost of care. In theory, the traditional models could lead to unnecessary procedures and less effective care. Clearly it reinforces the silos that exist between hospitals and physicians.
As the Spanish philosopher George Santayana said, “Those who cannot remember the past are condemned to repeat it.” Remember “Global Capitation?” Global capitation was supposed to align the hospitals and physicians by setting standard reimbursement rates for treating a health plan member. With California being the one exception, capitation is all but forgotten as a reimbursement model. So, why are bundled payments any different?
The Golden Rule can define the fundamental issue with bundled payments: ‘those who have the gold make the rules.’ Like global capitation, bundled payments are predicated on the hospitals distributing the payments. Without first establishing trust between the two parties, bundled payments look like one more point of contention to further the hospital-physician divide.
The almighty dollar can be a powerful persuasion mechanism, but without an infrastructure to reinforce the behavior, results may be short-lived. In order to sustain change, physicians and hospitals must collaborate on all fronts. From organizational structures to healthcare data exchanges to quality metrics, healthcare providers must begin to break down the silos that exist today.
Collaboration requires hospitals and physicians to play on a level field. At the end of the day, someone has to be responsible for distributing payments. If providers can truly harness the data necessary to measure costs and quality, the next step will be sharing that data.
Providing transparency into the measurements used to distribute payments will allow physicians to build a level of trust in the system and adoption rates will ultimately improve. Until the trust issue is resolved, bundling payments may result in a repeat performance.
Jim Bohnsack is Vice President at TransUnion Healthcare.