Dive Brief:
- While bundled payments once seemed like the solution to some key healthcare cost and quality problems, research is suggesting that this approach may not be effective—at least not without changes in its design.
- One major disappointment comes from California, where a broad-based bundled payment pilot established in 2010 by the Integrated Healthcare Association seems to have failed, according to a RAND Corp. study published in Health Affairs. By 2013, the pilot had not succeeded at implementing bundled payment for orthopedic procedures across multiple payers and hospital-physician partnerships.
- Problems beset the California project at every level. On the one hand, providers feared that the arrangements would violate the state's prohibition on hospitals employing physicians and providers and payers argued over bundle definition and assumption of risk. Meanwhile, two large insurers pulled out and six of eight hospitals that had shown interest didn't go forward due to high investment costs.
Dive Insight:
Though bundled payments have worked in scattered situations, the outcome of this experiment shows why they haven't been widely implemented. Payers and providers still seem too far apart when it comes to the assumption of risk, and it seemingly costs too much for a larger number of hospitals to explore bundled models. In retrospect, it's not surprising that few bundled services contracts were signed during the California experiment.
According to the RAND study, however, there's still some lessons to be learned from the failure of this project. For example, says author Tom Williams, simply bundling payment doesn't do much to change healthcare delivery. The key to benefiting from such models is getting providers to re-engineer healthcare delivery, not just combine separately paid services into a single check. The goals of such re-engineering includes reductions in unnecessary care, cuts in readmissions and improvement in patient function outcomes, writes Williams.