Do bundled payments put some patients at risk?

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Are value-based payment reforms, meant to cut medical costs and improve care, hurting some patients?

Caroline Thirukumaran, a researcher at the University of Rochester Medical Center, is leading a multi-university team looking for an answer to that question.

Caroline Thirukumaran

Her project, aided by a four year $1.5 million National Institutes of Health grant, comes at a time when the U.S. medical system—rated among the world’s most expensive by a 2017 Commonwealth Fund report—is in flux. Policy experts, providers and politicians are looking for ways to lower costs without sacrificing or even improving quality or access to care.

It has long been established that in the United States racial minorities have poorer outcomes, Thirukumaran says. Her research aims to see whether an alternative payment scheme designed to cut costs and improve care might be inadvertently shortchanging some of the most vulnerable patients.

The U.S. medical system has paid doctors, hospitals and other medical providers under a model called fee for service. It is a system that reimburses providers essentially the same way as some factory workers are paid, by the piece.

But where factory workers get so much for every item they produce, doctors get paid for each procedure they perform or service they provide. The more procedures or services a doctor provides, the more money he makes. The system works the same way for hospitals.

Critics say fee for service values quantity over quality and thus wrongly incentivizes doctors and hospitals by rewarding them for doing more while paying almost no attention to quality of care. In fact, many doctors don’t like the fee-for-service model, which, because of its emphasis on quantity, is widely derided among physicians as hamster-wheel medicine.

Led by the Centers for Medicare and Medicaid Services, government and private insurers for the last decade or so have experimented with alternate payment methods that are supposed to reward quality of care rather than quantity.

Under bundled payment, instead of being separately paid for each step in a care episode, hospitals get a set amount of money for a given procedure. They then use that money to provide beginning-to-end care.

In the traditional fee-for-service model, each doctor involved in a knee-replacement operation would, for example, bill and be reimbursed by Medicare, Medicaid or a private insurance company separately. That would mean separate bills and payments for surgeons, anesthesiologists and pre- and post-surgical care providers, plus additional separate bills from and payments to hospitals and rehabilitation facilities or home-care providers.

In a bundled-payment scenario, a hospital has to use the single payment to reimburse all providers in the so-called knee-replacement event, deciding how to divvy up the bundled sum among all parties involved in the episode.

Thirukumaran’s past work has largely centered on orthopedics. Her current investigation specifically looks at how bundled payments for hip, knee and other joint-replacement surgeries work for economically disadvantaged patients and minorities.

Her study comes at a time when all U.S. health care policies including bundled-care experiments are under scrutiny and undergoing change.

In an experimental program called Comprehensive Care for Joint Replacement, CMS in 2016 began to allot bundled payments to some hospitals doing joint-replacement surgeries for Medicare patients.

Two ideas are behind bundled payments: A prime objective is cutting costs. But bundled-payment proponents also theorize that faced with a finite supply of money, hospitals will deliver care more efficiently by encouraging providers to work more closely together, and thus improve care quality.

Thirukumaran is not sure whether bundled payments will always work to all patients’ advantage, however. Research shows that racial minorities and economically disadvantaged patients as groups do not get the best quality care, she says. Would bundled payment exacerbate that trend?

“The bundled-payment model could motivate hospitals to adopt measures that could worsen racial and socioeconomic disparities of hip- and knee-replacement surgery utilization and outcomes,” Thirukumaran speculates.

Hospitals might, for example, be tempted to discharge joint-replacement patients too soon. Or seeking to avoid a costly nursing home stay, they might send patients directly home when they should go into a skilled nursing facility for rehabilitation. Safety-net hospitals, which are often already financially challenged, might be doubly tempted to take shortcuts.

U.S. experiments with alternative payment schemes’ progress has been uneven. Already under way as limited tests by CMS and some private insurers before the 2010 passage of the Patient Protection and Affordable Care Act, such bundled schemes were baked into the act, commonly known as Obamacare.

But Republicans, many of whom ran on a promise to eliminate Obamacare and added control of the White House to their previous control of both houses of Congress with President Donald Trump’s 2016 election, declared gutting Obamacare to be their No.1 job. The GOP has not succeeded in that goal, but it efforts have significantly disrupted some aspects of U.S. health care.

Trump’s first secretary of Health and Human Services, Tom Price, an orthopedist and three-term congressman who has long been on record as a bundled-payment skeptic, sought to eliminate or at least significantly scale back CMS’ alternative payment experiments including CCJR.

After Price was forced out seven months into his term by scandals centering on extravagant taxpayer-funded travel arrangements, his successor, Alex Azar, recommitted Medicare to programs Price had cancelled. Under the Azar reboot, CCJR is scaled back from its original scope. But Azar has added a key wrinkle.

Where previously providers were able to opt in or out of alternative payment experiments at their own discretion, Azar has decreed that participation will no longer be up to providers.

“If to test a hypothesis around changing our health care system it needs to be mandatory as opposed to voluntary to get adequate data, then so be it,” Azar told a congressional committee last month.

Under the new regime, hospitals are being randomly assigned as CCJR participants. Thirukumaran believes the program has adequate safeguards to keep hospitals on shaky footing from being forced to further endanger their positions. But she still sees unintended consequences as possible.

To tease out whether minorities or poorer patients are being shortchanged under CCJR, Thirukumaran’s team will analyze reams of data generated by providers participating in the bundled-payment program. If there are weak spots in the system, she hopes her research will point to ways they can be smoothed out or eliminated.



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