NCPA - National Center for Policy Analysis

Study Raises Questions about "Bundling" to Pay Doctors

November 9, 2011

There's a lot of concern today that paying fees to medical providers for each service may lead to unnecessary care.  But there's no easy way to replace the massively complicated fee-for-service system.  One of the fashionable suggestions for new-style payment is "bundling," in which providers typically get a set amount that is supposed to cover an episode of care.  The idea is that the set payment will push providers to avoid unneeded procedures, as well as to do high-quality work that avoids the extra costs that accompany complications, says the Wall Street Journal.

But a new study published in Health Affairs raises questions about the feasibility of bundling.  The researchers, from the Rand Corporation and the Harvard School of Public Health, looked at three sites that were trying to implement a bundling methodology developed by the nonprofit Health Care Incentives Improvement Institute.  The method is called Prometheus.

  • In two to three years of trying, none of the providers or insurers actually made or received a bundled payment, or even implemented a contract to start them.
  • That "lagged months or years behind their planned milestones," notes the study, which reflected results up to May of this year.
  • One challenge faced by the sites was analyzing historical medical data to develop payment rates, because of software errors and problems with the claims databases.
  • Another issue was meshing the bundling methods with insurers' processes for processing claims.
  • The study said the historical data problem was ultimately resolved, but "no site succeeded in modifying its claims processing methodology" to work with bundles.

Still, the Rand researchers said the attempts had some good effects, including stimulating efforts to coordinate and improve care.  They also suggested that future efforts might go more smoothly due to technical improvements to the Prometheus methodology, which includes a range of software tools.

Source: Anna Wilde Mathews, "Study Raises Questions about 'Bundling' To Pay Doctors," Wall Street Journal, November 7, 2011. Peter S. Hussey, M. Susan Ridgely and Meredith B. Rosenthal, "The PROMETHEUS Bundled Payment Experiment: Slow Start Shows Problems In Implementing New Payment Models," Health Affairs, November 2011.

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