Bundled Payments are Hard

One of the big issues in breaking down siloed care is how to “bundle” a payment. Providers balk unless you “risk adjust”: basically account for variations among patients. Without a risk-adjusted payment, a few high-cost patients are going to wipe out any savings. So, what to risk adjust? That’s the big question. In it’s simplest form, you either pay more to help adjust for provider risk or limit those involved in the demonstration. Exclude “risky” patients from bundling. I think that defeats the whole point.

Quoting from a behind the paywall trade pub:

Bundling is still experimental — and an accurate method is difficult to determine in the abstract — CMS may want to consider a combination of pre-payment risk adjustment that could be reconciled after the fact in order to account for high-cost patients, says Paul Van de Water of the Center on Budget and Policy Priorities. This would give doctors more security in participating in bundling, Van de Water said, as risk adjustment is never going to completely account for outliers.

Other options include flagging particular codes, such as for diabetes, so you know who is “riskier.” But that’s still pretty crude and it’s tough to get an accurate picture just on claims data.

Still others want “the medical, social, and personal patient factors that are beyond a provider’s control, such as poor nutrition, tobacco and alcohol use, and non-compliance with treatment recommendations ….
and geography, right down to neighborhoods people live in, also needs to be taken into account. This account for underserved areas. And they’re talking block-by-block.

This is hopelessly complex. But bundled payments are a big part of the “savings” in the ACA.

7 Responses

  1. Nova, why can’t they just go hospital by hospital, medical group by medical group etc. and look at their historical cost per patient average or something for any given period?


  2. there’s struggle over every aspect of that. do you include the outliers in the average? that raise it. and what’s the given period? 30 days around a hospitalization? every aspect of this is looked at an debated.

    i’ll see if I can find some links for you this afternoon.


  3. Oh wait, that doesn’t makes sense does it, if they haven’t been bundling payments already?


  4. oh — and if the payment is bundled — there’s only one payment from the payer. who gets it? the hospital? the doc? how do they divvy it up? what if there’s a dispute?


  5. It sounds like it should be simple but I can see that it’s not. Aren’t there other insurance type models they can adapt to this?

    Thanks, I’ll look at the links if you find them. It seems to me that people are working really hard to try to make this work……………………..yay. I thought your comments re medicaid and what the states are suggesting were really interesting yesterday.


  6. “lmsinca, on August 10, 2012 at 9:50 am said:

    It seems to me that people are working really hard to try to make this work”

    My impression from what Nova linked yesterday was that people are working really hard to figure out how to game the system and avoid costs or figure out a way to transfer them elsewhere, ideally to the federal government.


  7. jnc, I shouldn’t have combined those two statements, they were separate thoughts. I only said his comments re medicaid were interesting, not good. But I do think the people working on implementation of the ACA seem to be taking their jobs serious and trying to figure out how to do it,doesn’t mean there won’t be difficulties. There are always unintended consequences, especially with a new program, I’m just hoping they can make the exchanges work and figure out a way to bring costs down.


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