Bundled Payment Orthopedic Pilot Program A Bust In California

M. Susan Ridgely, JD Senior Policy Analyst RAND Corporation Santa Monica, CaliforniaMedicalResearch.com: Interview with:
M. Susan Ridgely, JD
Senior Policy Analyst
RAND Corporation
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.

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