The Case for Mandatory Bundled Payments

Photo by  Gage Skidmore  via  Flikr

Photo by Gage Skidmore via Flikr


Why new HHS secretary Tom Price should not ignore the study in this month's Journal of the American Medical Association

Under president elect Donald Trump, Republicans in Congress are vowing to repeal and replace the Affordable Care Act, effectively slowing down the shift to value-based reimbursement. The Center for Medicare and Medicaid Innovation, created under the ACA, is responsible for much of the industry momentum towards value – and for millions of dollars in annual savings. A new study in the Journal of the American Medical Association analyzed Medicare claims data to reveal that the CMMI’s mandatory bundled payment program for joint replacement, CJR, saved participating hospitals 8% on average and sometimes much more, without sacrificing quality of care. These numbers are significant; if every hospital in America were mandated to participate, the total savings would increase to an estimated $2 billion. Encouraged by CJR’s success, CMS finalized new mandatory bundles for cardiac care in late 2016 and expanded CJR to include additional procedures.

Despite evidence that these programs work, Tom Price, Trump’s nominee for secretary of Health and Human Services, is a vocal opponent of government-mandated bundled payment programs. In a letter to the CMMI last year, he accused the group of “experimenting with Americans’ health.” The latest study suggests that this statement is misleading as well as dismissive of the elective bundled payment programs that preceded CJR. Mandatory bundled payment programs encourage providers (in this case hospitals) to do a better job of coordinating care after the patient is discharged from the hospital. When providers are incentivized to curtail post-acute spending, patients receive a more appropriate level of care and unnecessary spending decreases. Wondering about quality? Certain data points in the study, such as hospital length of stay, also suggest that CJR patients may have received higher quality care than their fee for service counterparts.

If the ACA is repealed and the CMMI is disbanded, Price will likely revoke the mandatory bundled payment programs despite evidence of their success. This will not stop the shift to value-based care, but it will slow down progress, especially for the Medicare population. Elective programs will continue to exist, but these are not as effective as they attract only high-performing, efficient hospitals. We need a mandate to get lower performing hospitals to participate and to encourage consistent, positive change. Removing these programs means returning to a system that we know is inefficient –  this is not an instance of government overreach, as Price suggested in his letter, but of smart, evidence-based policy that works. While most policy decisions are made in the bubble of hyper-partisan politics, in healthcare we must make decisions based on evidence and facts. Price should know this.