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Home E-Weekly September 13, 2016

Study Backs Medicare's Bundled Payment System

Published: September 12, 2016

Medicare's bundled payment system has the potential to reduce healthcare spending and improve surgical care by limiting the use of post-acute care rehab and improving the overall performances of low-quality hospitals, according to research published in the journal Health Affairs.

The study's authors assessed the records of Medicare beneficiaries who underwent major surgery, including colectomies and hip replacements, to calculate both the cost of the procedures and the expense of the post-op recovery care. They drilled down to 30-day mortality rates and patient-reported satisfaction with the care they received to differentiate between high-quality and low-quality hospitals.

Medicare spent an average of $32,000 for patients' hospitalization and the first 30 days of post-op care, according to the study. The researchers also found that Medicare spent approximately $2,700 and $2,200 less for 30 and 90 days of post-op care, respectively, at high-quality hospitals. Notably, the expense of post-acute care accounted for 60% of the difference between the 30-day cost of care provided at high- and low-quality hospitals.

Ashish Jha, MD, MPH, a professor of international health at the Harvard School of Public Health and one of the study's authors, says high-quality hospitals spent less on patient care and had mortality rates that were less than half of the rates observed at low-quality hospitals. He notes that spending more to provide high-quality surgical care saves both lives and money, and believes the study's findings provide the proof policymakers need to focus on bundled payment programs that promote care at high-quality hospitals.

Medicare is currently trialing its bundled payment system in 67 markets nationwide. The payments include fees for the facility, physician and anesthesia provider, plus payment for all aspects of perioperative care and 90 days of recovery treatment. Hospitals that spend less than the bundled amount will earn additional payment, while those that spend more will pay a portion of the difference to CMS. The program's first year will end on Dec. 31, 2016, at which time payment reconciliations will occur.

Daniel Cook

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