Bundle payments to reduce costs, improve efficiency

2013-02-17T00:00:00Z 2013-02-17T22:03:08Z Bundle payments to reduce costs, improve efficiencyVanessa Renderman vanessa.renderman@nwi.com, (219) 933-3244 nwitimes.com

Government officials hope a pilot program to bundle billing medical services will reduce cost and improve efficiency in health care.

One of the milestones laid out in the Affordable Care Act timeline was a Jan. 1 deadline to expand the authority to bundle payments for medical care.

The law creates a national pilot program urging health care providers, such as doctors and hospitals, to cooperate and improve coordination and quality of care for patients, according to the U.S. Department of Health and Human Services.

The department defines payment bundling as a structure in which health care providers treating a person for the same or related conditions are paid an overall sum for treating the condition, rather than being paid for each separate procedure, test or treatment. The goal is to prevent complications and redundancy in patient care.

Payment bundling, as prescribed through the Affordable Care Act, applies to providers who serve Medicare patients, not necessarily those insured in the private sector, said Health and Human Services Chicago Regional Director Kenneth Munson.

It hopes to address the question, "How do you continue to have high-quality or improved quality care, but reduce the cost and reduce duplication of services?" he said.

He told of a hospitalized woman whose blood was drawn about five times for separate tests. She wondered why it could not be drawn just once or twice, and have multiple tests done on those vials.

The bundled payment initiative is a way to address that, Munson said.

Essentially, Medicare is negotiating with the provider on a set amount to pay. It will have no economic impact on the patient. Their premiums – if any – will not be affected, he said.

"This is all really between the federal government and the provider," Munson said.

The bundling payment system is not a broad-based program that applies to every hospital or physician group.

"Entities apply to be in the program," he said.

Munson thinks the trend could transition to the private sector.

"Moving away from fee-for-service and paying for an episode and for quality and outcome, that is where the private sector is going," he said.

This version is based on practices that began more than 20 years ago.

"It's a take-off of something that started a while ago," said Dr. Alex Stemer, president of Franciscan Medical Specialists and vice president of strategic planning for Franciscan Alliance Northern Indiana Region.

In the early 1990s, Medicare began bundling procedures, charging one price for the multiple parts of a procedure.

At its smallest scale, a pulmonologist performing bronchoscopy might code separate charges for each part of the procedure – such as inserting equipment, conducting the exam and collecting specimens – even though it all occurred during a singular procedure, he said.

"Bundling meant that Medicare paid one price for the entire procedure," Stemer said. "On a larger scale, Medicare began paying one fee for an entire hospitalization, for example, open heart surgery. This included the cost of surgery, the physicians, and all post-operative care."

"What they're saying is, 'We'll give you (a certain amount of money), you decide how to give the patient the best care,'" Stemer said. “This encourages everyone to find ways to coordinate care, reduce inefficiencies and improve outcomes. Overall, the results should be better for the patient, and less expensive to Medicare."

Hospitals may offer doctors a share of the savings, if they find ways to improve efficiency, such as using less costly implants and avoiding complications, he said.

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