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Possible Benefits of “Bundled” Health Care Payments

healthcareAmericans buy and sell most goods and services with the bundled approach. Companies package things like phone, internet and cable together for one, simplified monthly payment. When you sell a house, you pay a lump sum commission to the representing agents, not a fee for each service they provide.

However, the United States currently uses a fee-for-service system to pay for health care, in which each service, screening, procedure, drug and device is assessed a separate fee. Many believe this encourages some health care providers to order more medical care services than necessary to inflate their bill or to avoid potential malpractice lawsuits. Unfortunately, this practice adds to the increasing cost of health care spending and generally does not lead to better clinical outcomes.

In recent years, Medicare has tested an alternative bundled payment program in which, for example, a hospital would be paid a flat fee for the care of a patient throughout his stay. With only a fixed amount of money available, the hospital is careful to procure the services of whatever tests and specialists may be needed to treat the patient’s condition most effectively. Some hospitals have initiated post-discharge programs in which a nurse follows up with the patient to ensure he or she is following the prescribed treatment and coordinating with the doctor, in an effort to avoid re-admission.

The goal of the bundled payment system is to deliver the highest quality of care at a lower total cost. In doing so, providers waste no money on gatekeeper referrals or redundant tests, as the “values-based” bundled system is contingent on the patient’s outcome. The amount of a bundled payment is based on extensive data available on the services needed and the effects of age or comorbidity (the simultaneous presence of two chronic diseases or conditions in a patient) risks that may impact treatments.

The following are possible benefits of bundled health care payments:

  • Clinical teams, as opposed to insurance companies, have the freedom to decide how to spend the fixed, bundled payment to best treat each patient
  • Hospitalists are added to teams to coordinate all the inpatient specialists involved in the care cycle
  • Bundled payments are adjusted for risk so providers are rewarded for taking on difficult cases
  • Providers are penalized if they over-treat patients or perform care in unnecessarily high-cost settings
  • Providers are empowered to quickly deploy new services, more accurate diagnostic tests or more expensive interventions to improve outcomes or lower the overall cost of care
  • Provider teams are incentivized to work together to understand the actual costs of each, learn how to do things better and get the right care the first time
  • Promotes specialization; instead of operating as a “jack of all ailments,” many providers opt to target conditions in which they consistently achieve a positive outcome at low cost
  • Patients have the flexibility to go to the physician and the health care setting of their choice
  • Manufacturers of expensive drugs, devices and diagnostic tests are compelled to demonstrate that their product substantially improves outcomes and/or lowers the total cost of care
  • Health care providers are motivated to select less expensive but equally effective medications instead of abdicating that responsibility to patients, pharmacists and insurance companies

Source: AE Marketing Hub