Today’s Managing Health Care Costs Number is $200 billion
Interquartile cost variation, 2005
Source: Health Services Research, (2010)
A post with (almost) no reference to the 2016 Presidential election follows.
This week’s JAMA has a review of the Center for Medicare and Medicaid Services plan to move to 90 day bundled payment for heart attacks and bypass surgery. Medicare pays $200 billion annually for this care.
The plan will go into effect in July, 2017 – and budgets will initially be determined by historical hospital costs. However, in 2020 the budgets will instead by based on regional expenses – which could mean high-cost hospitals will face a substantial pay cut.
The program offers a single payment to the hospital, which would pay affiliated physicians. Readmissions (in the first 90 days) would be included –and all results would be risk adjusted. Hospitals would only be eligible for bonus payments if they met quality standards.
Virtually all of the projected cost savings from this program, which would roll out to 98 randomly selected metropolitan areas, would come in the final years when hospitals will have a larger risk corridor and be judged based on regional rather than hospital-specific results.
There’s a lot of promise here
1) Cardiac care and cardiac surgery is well standardized – there is not massive disagreement about what care is “best.”
2) A previous Medicare bundled payment program for cardiac surgery was highly successful. This was the only payment reform program that the CBO judged a success, although it has never been replicated or expanded
3) There is a huge amount of variation between the higher and the lower cost facilities, which is not definitively related to quality.
4) The bundles are hospital –centric, as opposed to many other episodes where a substantial portion of the cost is ambulatory
5) The program will be implemented in randomly chosen areas – allowing for high quality studies to determine efficacy
6) There is substantial volume and money here – so if value of care is improved many patients will benefit and much money can be saved.
But there will be objections. Physicians who are not employed by hospitals are worried about hospitals controlling professional reimbursements. Academic medical centers with high historic costs will be justifiably worried, and will lobby for a longer phase in period for regional budgets. Or they will argue against the program altogether. This payment reform is related to MACRA(The Medicare Access and CHIP Reauthorization Act of 2015) rather than to the Affordable Care Act.
(OK – so this is not totally without a glancing reference to the elections).
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