MedicalResearch.com Interview with:
A Jay Holmgren
A Jay Holmgren
Doctoral Student, Health Policy and Management
Harvard Business School
MedicalResearch.com: What is the background for this study? What are the main findings?
Response: Post-acute care, care that is delivered following an acute care hospitalization, is one of the largest drivers of variation in US health care spending.
To address this, Medicare has created several payment reform systems targeting post-acute care, including a voluntary bundled payment program known as the Model 3 of the Bundled Payment for Care Improvement (BPCI) Initiative for post-acute care providers such as skilled nursing facilities, long-term care hospitals, or inpatient rehabilitation facilities. Participants are given a target price for an episode of care which is then reconciled against actual spending; providers who spend under the target price retain some of the savings, while those who spend more must reimburse Medicare for some of the difference.
Our study sought to evaluate the level of participation in this program and identify what providers were more likely to participate. We found that fewer than 4% of eligible post-acute care providers ever participated in the program, and over 40% of those who did participate dropped out. The providers more likely to remain in the program were skilled nursing facilities that were higher quality, for-profit, and were part of a multi-facility organization.
MedicalResearch.com: Interview with:
M. Susan Ridgely, JD
Senior Policy Analyst
Santa Monica, California
Medical Research: What are the main findings of the study?
Answer: We evaluated a three-year effort, coordinated by the Integrated Healthcare Association, to determine whether bundled payment could be an effective payment model for California. The pilot focused on bundled payment for orthopedic procedures for commercially insured adults under age 65. Bundled payment is a much-touted strategy that pays doctors and hospitals one fee for performing a procedure or caring for an illness. The strategy is seen as one of the most-promising ways to curb health care spending. Unfortunately, the project failed to meet its goals, succumbing to recruitment challenges, regulatory uncertainty, administrative burden and concerns about financial risk.
At the outset of the project, participants included six of the state’s largest health plans, eight hospitals and an independent practice association. Eventually, two insurers dropped out because they believed the bundled payment model in this project would not lead to a redesign of care or lower costs. Another decided that bundled payment was incompatible with its primary type of business (health maintenance organization). Just two hospitals eventually signed contracts with the three remaining health plans to use bundled payments. Hospitals that dropped out cited concerns about the time and effort involved.
The project was hurt by a lack of consensus about what types of cases to include and which services belonged in the bundle. In the end, most stakeholders agreed that the bundle definitions were probably too narrow to capture enough procedures to make bundled payment viable.