Medicare ’s Bundled Payment Programs Suffer From Fatal Flaws, But There Is A Logical Alternative

Several authors from the Brookings Institution recently argued in favor of making Medicare’s Bundled Payment for Care Improvement (BPCI) initiative mandatory. While the principles guiding their recommendations are sound, the recommendations themselves fail to acknowledge five fatal methodological flaws within the BPCI program. Their analysis also overlooks the most logical and reasonable alternative: a physician-focused episode-of-care payment model. Five Fatal Flaws Of The BPCI Initiative 1. Hospital-Centricity Each BPCI bundle is triggered by an inpatient stay and in particular by a specific diagnosis-related group (DRG). There are many shortcomings of using DRGs to trigger episodes. Chief among them is that the heterogeneity of procedures and conditions contained in each DRG creates significant variation in the total costs of episodes, making it more difficult to distinguish between warranted and unwarranted variation. More importantly, when regulators force every episode to be triggered by a hospital stay, they effectively prevent physicians from exercising their judgement in finding the best and most efficient site of service for a given episode. For instance, procedures at some stand-alone surgery centers, in which commercially insured plan members receive complex surgeries, including joint replacements, can be half the price of hospital-based surgeries. Why shouldn’t Medicare beneficiaries and the Medicare Trust Fund take advantage of those options? Many procedures...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Insurance and Coverage Medicare Payment Policy Alternative Payment Models Bundled Payment for Care Improvement initiative Bundled Payments Merit-Based Incentive Payment System Physician-Focused Payment Model Technical Ad Source Type: blogs