Critical analysis of Bundled Payments

How fare bundled payments are for public?

Source: http://bhmpc.com/2013/10/6-cms-bundled-payments-of-care-improvement-innovations-under-the-aca/

Healthcare industry is witnessing a major change in service from fee-for-service to value-based care. In a continuous attempt to improve quality of healthcare services, bundled payments were introduced in 1984 by Texas Heart Institute. Later on various models of bundled payments were introduced as a part of Bundled Payments for Care Improvement (BPCI) 4 models of bundled payments were introduced by Centers for Medicare and Medicaid services (CMS). Started with bundled payments for knee replacement surgery, we have witnessed that there have been constant efforts to increase the number of services covered under the model of bundled payments.

“ What are bundled payments? It is a single payment, made to provider and/or healthcare facilities for all services to treat a patient’s condition within a defined period of time.”

Different Models for bundled payments:

Now let us look in brief about various bundled payment models introduced over the period of time. Previously insurance companies used to pay for services provided to different departments separately, but as a part of bundled payment, insurance companies, especially Medicare, will pay lump sum to providers for all the services utilized by a patient for a particular surgery or disease (which they called ‘episode of care’)

Model 1-

• In this model Episode of care is defined as the inpatient stay in the acute care hospital.

• Medicare pays a discounted rate to the hospital as compared to original Medicare program depending upon the payment rates decided by Inpatient Prospective Payment System.

• Physicians are paid separately.

Model 2 and 3

• Model with retrospective payment type.

• Expanding the scope of bundled payments, under model 2 CMS included 48 different clinical episodes.

• Beneficiaries are covered for 30, 60 and 90 days after hospital discharge from post-acute care episodes.

Model 4

• Model with prospective payment type.

• All inpatient charges for services included in part A and B services are paid by Medicare.

• This also includes hospital, physician and other practitioner charges incurred during the episode of care.

• Charges during initial in-patient stays and readmission covered

Let us have an overview of what it means from a patient’s point of view.

Bundled payments drives towards best quality of care and improved efforts from hospitals to reduce hospital acquired infections or other complications due to medical errors. This type of payments brings more transparency for patients, as they know exactly how much will it cost for specific episode of disease like heart surgery or knee replacement surgery. They do not have to worry about individual follow-up costs or any other specialist consultation cost. Latest bundled payment model will take care of everything right from hospitalization of patient to pharmacy charges, surgery and post-operative care. They are even assured of better quality of care because in order to minimize unforeseen complications hospitals try to provide best care available and improve by reducing risk factors.

Another advantage that patients will have is that they do not have to deal with different departments to make the due payments. If an episode of care is covered by their insurance company, they just have to claim for one bill provided by the hospital which includes the whole scope of treatment. This gives a clear picture to the patient of what all things are available prior to the surgery or particular pathology. Previously they had to save each and every bill charged for every pharmacy visit or services utilized during hospital stay over and above the bill for surgery. And this made more chances of errors while filing for claims and resultant denial. Under bundled payments model, patients are charged pre-fixed amount for any episode of care which covers all charges from different departments. Patients also do not have to worry about post-operative care as it is already included for up to 6 months in some of the episodes of care. This is the most valuable advantage for patients according to me.

With bundled payments in place, aiming for value-based care and all other good causes, it also has some limitations. Not all care episodes are included as part of this model. Moreover, there are various risk factors like certain preexisting medical condition makes the whole process complicated and sometimes they are not covered under this model. Hospitals in order to minimize cost do not try to diagnose patient as a whole and only attempt to treat episode of care for which patient has been admitted and thus focus on only episode of care they are paid for. Hence care coordination might be an issue for some of the patients. In general bundled payments are beneficial for patients as they receive meaningful care for the pathology they have been admitted.

References:

https://www.cms.gov/newsroom/fact-sheets/bundled-payments-care-improvement-initiative-bpci

https://www.commonwealthfund.org/blog/2016/promise-and-pitfalls-bundled-payments

http://www.insight-txcin.org/post/value-based-care-vs-fee-for-service