Thursday, September 13, 2012

Fwd: qotd: How many "bundles" do we need in health care?

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-------- Original Message --------
Subject: qotd: How many "bundles" do we need in health care?
Date: Thu, 13 Sep 2012 12:52:44 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
September 5, 2012
The Arkansas Innovation
By Ezekiel J. Emanuel

(Arkansas) is moving toward ending "fee-for-service" payments, in which
each procedure a patient undergoes for a single medical condition is
billed separately. Instead, the costs of all the hospitalizations,
office visits, tests and treatments will be rolled into one
"episode-based" or "bundled" payment.

This is how it will work: Medicaid and private insurers will identify
the doctor or hospital who is primarily responsible for the patient's
care — the "quarterback," as Andrew Allison, the state's Medicaid
director, put it. The quarterback will be reimbursed for the total cost
of an episode of care — a hip or knee replacement; treatment for an
upper respiratory infection or congestive heart failure; or perinatal
care (the baby's delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of
the services provided to their patients, and will receive quarterly
reports on those metrics from the state (for Medicaid patients) or
private insurers. If they have delivered good care based on agreed-upon
standards, and if their billings come in lower than the agreed-upon
level, they can keep a portion of the difference. If their billings come
in above an acceptable level — usually because they have ordered too
many unnecessary tests, office visits or inappropriate treatments — they
will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee
replacements, which have similar costs for all patients, have been
previously tested. But for other conditions, not every patient's needs
are the same. Some pregnant women are healthy while others have
diabetes. The state and insurers will have to provide "risk adjustment"
payments — in which providers are reimbursed more for treating sicker
patients — and some patients with especially complicated illnesses may
need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are
treated at widely varying costs, mainly because physicians prescribe
different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by
providing standards for appropriate care linked to the costs of
treatment and the quality of the doctor's performance compared with that
of other doctors.


The New York Times
September 12, 2012
Is 'Bundled' Medical Care a Good Idea?

Despite Ezekiel J. Emanuel's implication, Arkansas isn't the only state
to plan to substitute "bundled" medical payments for fee-for-service.
Vermont, Massachusetts and Oregon have similar intentions. But without
basic changes in the organization and delivery of care, it is doubtful
that "bundled" payments can be successfully distributed among all the
providers of care.

A stifling supervisory bureaucracy interfering with medical care and
endless disputes among providers and between providers and payers are
almost certain to develop. Physicians are unlikely to accept such an
arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single
public payer guarantees comprehensive care for all, and pays accountable
multispecialty physician groups not by reimbursement for specific
services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at
Harvard Medical School, is a former editor in chief of The New England
Journal of Medicine.

Comment: What a simple idea. Instead of paying a fee for each itemized
service - a payment model that supposedly encourages the delivery of
excess services - a lump (bundled) fee would be paid for each episode of
care. That episode might be as simple as a common cold, or as complex as
extensive, prolonged care of a major trauma victim. But because of the
single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care
are there? How is each one defined? How is an appropriate bundled fee
determined for each of these episodes? Which individuals and entities
would share in each fee? Would the various providers be bundled together
just as the fee for each episode of care is bundled? How many variations
of bundled providers would you have? How many bundled groups would each
individual provider belong to? How complex would the administrative task
be to distribute the bundled fee within the bundled group of providers?
Could an accountable care organization (ACO) serve as a single bundled
group of providers that could care for each and every episode of care?
Would each ACO include providers of tertiary services such as advanced
cardiac or oncological surgeries? Would each ACO want to contract for
bundled payments for common colds and other brief, single contact
services? Would one ACO be the only bundled entity in a community, or
could the community support multiple competing ACOs? Could the community
support providers outside of the ACO and how would they be bundled?
Would each payer - Medicare, Medicaid, and a multitude of private
insurers - contract separately with each bundled group of providers for
each separate episode of care? If instead the bundled payments were
standardized, then why would you want the inefficiency of multiple
payers when a single payer would simplify at least that part of the
process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more
administrative complexity to a health care system that already has the
world's worst administrative excesses. Instead of playing more games
with a dysfunctional, fragmented financing system, we should convert to
a single payer national health program. Under such a system costs can be
budgeted - whether it's through global budgets for hospitals, capitation
payments for integrated multispecialty physician groups,
physician-hospital organizations, community health centers, or through
fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be
free to cooperate with the health care professionals and institutions to
establish the best payment arrangements to see that everyone receives
the highest quality of care under a system that would provide the nation
with greatest health care value attainable. One giant bundle for all of us.

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