MedPAC Examines 'Bundled Payments' To Hospitals, Doctors

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health;  Primary Care / General Practice
Article Date: 07 Mar 2008 - 6:00 PST

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Medicare Payment Advisory Commission members on Wednesday discussed proposals that would provide "bundled payments" to hospitals and doctors for treatment as a way to reduce inefficiency and health care costs, CQ HealthBeat reports.

One of the draft recommendations states that Congress should require CMS to "confidentially report resource use around hospitalizations. After two years, Congress should implement 'virtual bundling,' which reduces payments to hospitals and inpatient physicians with relatively high resource use across episodes of care for select conditions. The payment penalty can be used to finance additional payments to high-quality fee-for-service providers with relatively low average resource use." According to CQ HealthBeat, virtual bundled payment would use the current fee-for-service system but would "begin weaning providers away from inefficient ordering of tests and procedures" by penalizing them for "above average resource use."

The second draft recommendation would require CMS to create a "voluntary pilot program" to look into issues related to actual bundled payments. Actual bundled payment would provide flat fixed payments to providers regardless of the level of services provided.

Commissioners "were clearly drawn to the idea" of bundled payments but expressed concern about the amount of CMS resources required for such a program, CQ HealthBeat reports. MedPAC Chair Glenn Hackbarth at the start of the meeting said that the committee has not yet decided whether to adopt a final recommendation at its April meeting urging Congress to enact legislation to create a bundled payment system for Medicare.

Comparative Effectiveness Discussed
Commissioners at Wednesday's meeting also examined options on how to structure an independent entity charged with running an ongoing program of research into the comparative effectiveness of various prescription drugs, surgical treatments and medical devices. Commissioners discussed the makeup of an independent board assigned with overseeing research and funding for the program (Reichard, CQ HealthBeat, 3/5).

At a June 2007 hearing of the House Ways and Means Subcommittee on Health, MedPAC suggested that the entity have mandatory funding sources, such as a tax on money collected by insurers or funding based on a small portion of the holdings in the Medicare Trust Fund (Kaiser Daily Health Policy Report, 6/13/07).

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