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Medicare’s bundled payments reduce hospital costs

Written by Diane Archer

study of Medicare’s payment innovation to rein in costs while promoting quality care shows that it is working. With authority through the Affordable Care Act  to test new ways of paying hospitals, Medicare began a pilot to pay hospitals a set fee for hip and knee replacements. Medicare’s “bundled payments” for these services have reduced hospital costs.

With bundled payments, costs for knee and hip replacement have fallen and quality has stayed the same or improved. And, hospitals have not performed more procedures or otherwise changed their treatments in ways that undermine care.  Note: The pilot is voluntary, giving hospitals the right to participate or not.

The study finds that the same kinds of patients are getting these knee and hip replacements at about the same volume.

Through this bundled payment model, hospitals receive a fixed fee to cover 90 days of care. Consequently, they have an incentive to deliver good care and reduce the likelihood of complications, so that their patients are not rehospitalized for the same issues.

Dylan Scott, Vox, reports that the Trump administration supports bundled payments and plans to next pilot them for some types of cancer care and heart stents. According to Ezekiel Emanuel, one of the study’s authors, the savings can be in the thousands of dollars for each individual in one or two years. In sharp contrast, Accountable Care Organizations, ACOs, save only a few hundred dollars for each individual.

Here’s more from Just Care:


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