Managed Healthcare Executive - December 2008 - (Page 19)

{ SPECIAL REPORT } Global-rate pilots expected to reward providers who do the right thing by Izabella Iizuka Payment Bundled n the mid-1990s, Medicare tested a bundled-payment reimbursement arrangement for cardiac bypass surgery at four hospitals and was able to document savings. Provider pushback hampered further e orts, and the bundled payment concept died out. Until now. Experts worldwide are now recommending some type of bundled payment system that incorporates a payfor-performance (P4P) component. However, as James Bentley, senior vice president for policy planning at the American Hospital Assn., said in the Washington Health Policy Week in Review, “We’ve got to learn to walk before we can run.” The 1990s CMS project was not a rousing success from the providers’ point of view. Some hospitals that lost market share believed the government didn’t promote the project su ciently to drive the volume they wanted. Hospitals were able to reduce unnecessary testing and make generic substitutions while also reducing lengths of stay. According to CMS, quality diImagezoo/Getty Images I and $7.9 million for patients and their insurers. With memories of the failed capitation movement, participating providers were reluctant to adopt bundledpayment projects anytime soon, and the majority believed they should have received extra payments to cover the expense of implementing the new billing arrangements. Current P4P trends have renewed interest in bundled payment and other types of payment reform, but this time, payers are counting on widespread provider support now that P4P has become more mainstream. In fact, a 2007 Med-Vantage national study showed that in 2003, there were only 39 P4P programs, but that number grew to 148 by 2007. The new CMS Acute Care Episode (ACE) project, schedrectors at those facilities said that inuled to begin January 1, 2009, creased physician emphasis on avoiding will be conducted in Texas, Oklahoma, complications was the primary cause for New Mexico and Colorado, although quality improvements. there will be only one demonstration Medicare estimated savings at 10% site in each market during the program’s however—$42.3 million for Medicare, rst year. Rather than the usual separate DECEMBER 2008 19

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Managed Healthcare Executive - December 2008 For Your Benefit Editorial Advisors Contents News Analysis Politics & Policy Letter of the Law Puerto Rico’s PLAN State Report Bundled Payment Technology Drug Class Overview Managed Care Outlook Desktop Resource Ad/Edit Index

Managed Healthcare Executive - December 2008

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