News & Commentary

Bundled Payment Programs Multiply

Hundreds of hospitals and thousands of physicians are participating in bundled payment programs, and most bundled payment contracts have upside and downside risk, according to François de Brantes, executive director of the Health Care Incentives Improvement Institute (HCI3). “We’re now in the scaling phase of this payment model and no longer in pilot or early stage,” he added.

In a report that HCI3 commissioned, the consultant Bailit Health Purchasing showed that both public and private payers are starting to use bundles as a core strategy to reform both payment and the delivery of care.

Bailit interviewed executives from six insurers and one Medicaid program and found three strong trends. First, the insurers were significantly expanding their bundled payment programs by including more providers and more conditions and episodes.

Second, they were automating resource-intensive processes that had been done manually, usually with spreadsheets.

To automate cost and reconciliation calculations, insurers are investing significantly in information systems from MedAssets, Optum, and TriZetto.

Through these investments, insurers may be demonstrating that bundling is effective at controlling costs, limiting complications, and improving quality.

Third, the insurers were simplifying their methods to make them easier to administer.

The 16-page report is based on interviews with executives from Aetna, Arkansas Medicaid, Arkansas Blue Cross and Blue Shield, Blue Cross and Blue Shield of North Carolina, Geisinger Health Plans, HealthNow New York, and Horizon Blue Cross Blue Shield of New Jersey.

The most common bundled procedures were hip and knee replacements. Less common were bundles for attention deficit hyperactivity disorder, coronary artery bypass graft surgery, colonoscopy, congestive heart failure, developmental disabilities, perinatal care, tonsillectomy, and upper respiratory infection.

One payer reported doing bundles for bariatric surgery and cataract removal, and another is doing adjuvant breast cancer and pregnancy.

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