The current system is ridden with high administrative costs, and gets even more complicated and costly when a patient receives additional care for the original problem at another medical office or hospital.
In a bundled payment system, one payment covers all treatment and procedures related to a patient's primary diagnosis -- regardless of where or when the medical care is given.
Under this new system, the hospital assumes the financial risk for patient care during the entire process: Some patients will be ushered in and out of the system quickly, while others may suffer a complication such as a blood clot that requires additional treatment.
"It puts the accountability for the cost of the care onto the provider (hospital or medical office), rather than the payer (Medicare)," said SSM's Moore. "That's better for patients ...
"It does not make sense for a patient to have to pay and pay again for the same problem," he said. "It puts a cap on the total amount that the payer will be responsible for."
Ultimately, the patient is the payer -- either through paying higher taxes or higher insurance premiums. In recent years, the cost of U.S. health care has risen about 8 percent a year.
While applauding the pilot project, Kopp cautioned that the bundled payment system is only one step toward the establishment of what he believes is needed: accountable care organizations.
Under the model of accountable care, hospitals and physicians share the risk of managing all the needs of a patient, from flu shot to surgery. The Medicare system favors accountable care organizations as a way to reward providers who keep their patients healthy, and thus reduce costs.
Bundled payments require "hospitals and physicians to work together and there are opportunities for savings, but it's not the best way to manage care because you're not having the provider responsible for all care for the patient," Kopp said. "It's a halfway solution, but at least it's a step in the right direction."
In negotiating bundled payment rates with hospitals, CMS is crunching data to determine the average cost of treating a primary diagnosis in a particular region, such as the metropolitan St. Louis area, then lopping 2 percent off the top to put more pressure on hospitals to save costs.
As hospitals begin to consolidate their services and find ways to become more efficient, CMS is expected to further reduce Medicare reimbursements.
To be sure that hospitals don't provide an inferior level of care simply to save money, CMS plans to continue to monitor benchmark measures, such as surgery complication rates, readmission rates and patient satisfaction surveys.
Some private insurers have also experimented with bundled payments to cover the cost of treatment and procedures for certain surgeries and conditions.
"This is an idea that has been around for a while, but it is the first time Medicare has gotten into it in any significant way," Moore said. "It's just the right thing to do. ... I think this is a better way to take care of people. This ensures that wasteful care is not rewarded."
(c)2012 St. Louis Post-Dispatch
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