The popularity of fee-for-service as a payment model just took another hit. A few weeks ago we wrote about the increasing number of physicians who are moving away from fee-for-service because of its instability and unpredictability. Now it appears that physicians are moving away from it because bundled payments offer increased cost savings for episodes of care. Below, we’ll examine reasons for the surge of popularity in bundled payments, benefits of the model, and discuss steps toward removing the implementation roadblocks.
The changing tides of reimbursement
Changing reimbursement models across the national health system have created a situation that is like crosscurrents in a channel. Upheaval and choppy waters can make it tough to navigate from one side to the other. As it stands now, most healthcare systems are practicing a combination of fee-for-service and value-based reimbursement as they strive to change from the former to the latter. Trying to introduce bundled payments into that mix can be very challenging. That’s why one steady revenue management platform can help to hold the reimbursement ship steady while moving from one payment model to another.
Another challenge to the widespread adoption of bundled payments is that providers and payors don’t hold bundles in the same regard. One survey shows that while providers prefer bundled payments for episodes of care, payors aren’t so sure they like them. Regardless of this opinion gap, the survey found that bundled payment is the fastest growing payment model:
Health plans project bundled payment will grow 6% over five years, edging ahead of capitation and shared risk growth. And while both hospitals and payors project bundled payment will account for 17% of medical payments in five years, only half of the payers and just 40% of providers say they’re ready to implement bundles. And only a quarter have the tools in place to automate these complex models.
The savings are real
While payors try to calculate the benefits, providers are seeing cost savings in real time. One news article reported that a Texas hospital saved $6.1 million after implementing a bundled payment for joint replacement surgery. A healthcare reform investigation showed that by using the bundled payment model with 3,942 patients who received joint replacement surgery, “there was a decrease of $5,577 (20.8%) in total spending per episode.”
Patients want bundled payments, too. They understand that they will save time, money, and frustration if they no longer have to chase down every detail of an episode of care. As it stands now, in the majority of cases a patient has to do the legwork coordinating care with their primary care physician, specialists, surgeons, and rehab care. They have to dig hard to get information on costs, coordinate scheduling of appointments, and chase details on insurance coverage for each specific type of care. Bundled payments change that and move the system to a streamlined, coordinated process. A survey on the issue showed that 75% of patients understood bundled payments and that they can improve the quality of healthcare they receive. Adopting patient access software platforms helps to address this and can improve patient satisfaction.
Removing the roadblocks to bundled payments
Although the savings are real, there has to be enough volume to experience them and therein lies the rub. Not all providers can generate the procedure or episode volume necessary to experience substantial savings through bundled payments.
Another mitigating factor is that only certain types of care currently lend themselves to bundlings, such as joint replacement surgeries and cardiac care. Chronic care is more challenging to bundle because the elements involved aren’t necessarily standard and the episodes of care aren’t finite. For example, joint replacement has a predictable, finite course of surgery and rehabilitation. That isn’t necessarily true with cancer care.
Providers can employ some simple solutions to increase the speed at which they can move to bundled payments:
- Increasing volume. Increasing the number of patients using bundles will also improve overall cost savings.
- Increasing bundle sets. Increasing the number and type of bundled sets will automatically increase volume.
- Increasing use of bundles. As more providers, hospitals, and additional types of healthcare organizations adopt bundled payments, the model will become more mainstream.
The future of bundled payments
Between the current fractured reimbursement system and the widespread adoption of bundles stand many challenges: ACO payments, collaboration across care sites, and the availability of coordinated care data across delivery sites. If these pieces can be aligned, bundled payments might become as financially feasible in reality as they are popular in theory.
It won’t be easy to pave a new road between current payment models and the wholesale adoption of bundled payments — especially when providers and payors hold such differing viewpoints toward the model. Increasing pressure by providers to reduce healthcare costs will likely keep the issue front and center. Patient pressure to streamline care and lower costs may stoke the fire of promise that bundled payments hold. These drivers, along with a public discussion of the benefits of bundled payments, could work together to keep the impetus to finding solutions moving forward and prevent it from stalling, as so many other promising solutions have in the past.