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Bundled payments: Good in theory but difficult to implement

Bundled payments may sound good in theory, but the reality is falling short of expectations so far.

A report from the RAND Corp., a nonprofit global policy institute, indicates some cause for concern for those organizations indicating interest in the Centers for Medicare and Medicaid Services’ (CMS’) most recent bundled payments initiatives.

The RAND study, published in the November issue of the journal Health Affairs, evaluated the first 3 years of the Prometheus bundled payment pilot project conducted by the Health Care Incentives Improvement Institute. So far, no bundled payments have been made and no payment contracts for bundled payments have been executed in any of the three participating communities.

“There is a tremendous amount of interest in this type of payment reform, but we found that transferring it into practice is extremely difficult,” says lead author Peter Hussey, a RAND policy researcher.

Bundled payments are designed to encourage coordination of care and improved communication among healthcare providers, who all share a set fee for comprehensive treatment of a procedure or disease. The concept often is touted as a way to drive down inefficiencies and unnecessary care associated with the traditional fee-for-service payment model.

The three test sites—Crozer Keystone Health System-Independence Blue Cross in Pennsylvania, Employers’ Coalition on Health in Illinois, and Priority Health-Spectrum Health in Michigan—encountered difficulties deciding which health problems should be covered by bundled payments and what information physicians needed to improve the quality of care. In addition, all three found that many doctors were reluctant to adopt cost-cutting measures for fear they would impair the care provided. Each organization independently defined its payment structure, contracted with physicians and other providers, and established its own quality measures.

The study found that some significant improvements had been made despite the challenges in implementing bundled payments. Pilot participants had taken steps toward redesigning care and increasing provider awareness of ways they can control costs and improve care.

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