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With Republicans at the helm, health policy has doubled its number of frequently used R-words – from risk adjustment, risk corridors, and reinsurance, to repeal, replace, and repair. Camps are forming, with little ground for agreement. Even in value-based care, few seem willing to agree on details of the path from fee-for-service to patient-centered models or whether these models will be voluntary or mandatory moving forward.
But policymakers have more in common than they realize; the idea of value-based bundled payments has a history of bipartisan support. Inspired by approaches initiated by the two Bush Administrations, in 2013, under the Obama Administration, Medicare launched a voluntary bundled payment model, called the Bundled Payments for Care Improvement initiative, that has grown to $10 billion in program size. The model has proven to be an effective way to reduce costs while improving quality of care and currently includes 360 organizations and 1,755 providers that have agreed to participate.
Recently, the Secretary of the US Department of Health and Human Services, Tom Price, expressed strong support for voluntary bundled care payments during his confirmation hearing. I agree with him that this program should remain, and even grow, moving forward, and that it should be voluntary and not mandatory. Engaged providers who choose to be a part of this new health care revolution and are not forced to be are more energized and more likely to succeed. By keeping the program voluntary with the choice to opt in, The Centers for Medicare and Medicaid Services is incentivizing hospitals, doctors and other providers to work together to provide high quality, coordinated care for patients.
So, why bundles? A single payment for all health care services included in one “episode of care,” usually including multiple providers and settings, means a potential win-win situation for both care providers and patients. According to a recent study published in JAMA Internal Medicine, bundled payments led to substantial hospital savings, reduced Medicare payments and a decline in readmissions, emergency department visits and length of stay in post-acute settings. Patients were able to go home sooner and stay home more frequently than under the fee-for-service model.
Bundled payments create a more competitive model that will require less regulation and cast a wider net of participants. Less regulation and more choice of health care providers should appeal to policymakers, while the wide choice of participants should appeal to patients.
I’ve seen success of these programs firsthand as CEO of Remedy Partners, the largest creator of software and services that enable payers, employers and providers to organize and finance health care delivery around a patient’s episode of care. Remedy programs are expected to save the Medicare Trust Fund more than $120 million in 2017. And this is just the beginning. According to a 2013 report from the Congressional Budget Office, Medicare spends more than $170 billion (or more than one-half of all nondrug fee-for-service spending) on services provided during an “episode of care” for which a provider could be accountable. CMS is committed to transitioning 50 percent of fee-for-service spending to alternative payment models by 2018, a commitment they should stand by despite the party turnover.
To do so, CMS will increasingly rely on episode payment models to engage specialists and improve quality of care at a lower cost. It’s a goal we can all get behind. If we take the bipartisan path to health care reform, preserve Medicare bundled payments and incentivize private companies to implement these models, the savings generated can help pay for some of the wish-list items being hotly debated now.
Carolyn Magill is the CEO of Remedy Partners, a technology and services company that enables payers, employers and providers to organize and finance health care around an episode of care.
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