Reform that Helps Patients and Taxpayers

CAP Event Discusses Payment ‘Bundling’ Pilot Program to Improve Medicare

The Center for American Progress hosts a discussion with health care experts and a White House official about how “bundling” medical costs can save taxpayer money and improve care.

For more on this event, please see its event page.

“Our challenge in health care is not that the federal government is spending too much; our challenge in health care is that we as a country are spending too much,” said Neera Tanden, Chief Operating Officer of the Center for American Progress, at a June 18 event hosted by CAP. She explained how the project of health care reform should focus on overall health care expenditures. “If we really want to address the health care costs from the federal side, we have to address rising health care costs throughout our system. And that’s what the Affordable Care Act was meant to do.”

An introduction from White House Deputy Chief of Staff Nancy-Ann DeParle and a panel discussion followed Tanden’s opening remarks. Panel discussants included Francois de Brantes, national coordinator of PROMETHEUS Payment at the Health Care Incentives Improvement Institute; Judy Feder, visiting fellow of the Urban Institute and professor at Georgetown University; and Richard J. Gilfillan, acting director of the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services.

CAP released on the same day a report entitled “‘Bundling’ Payment for Episodes of Hospital Care: Issues and Recommendations for the New Pilot Program in Medicare,” which details policy recommendations for the design of a pilot program to change how Americans pay for health care. This kind of payment plan would “bundle” Medicare payments around hospital episodes of care, rather than patients having to pay separately for medical procedures and physician services provided during a hospital episode of care. The Affordable Care Act requires the Department of Health and Human Services to launch a pilot project bundling Medicare payments.

DeParle and the panel discussants were enthusiastic about the potential of payment bundling to make major advances in health care reform. DeParle said, “The new rules and incentives will reduce costs and improve care in the health care system as a whole, finally rewarding quality instead of quantity.” She called payment bundling an “important tool in the Affordable Care Act’s toolbox to control health care cost growth.” She added, “From talking to doctors in hospitals around the country, one thing is clear: This is how they want to provide health care to their patients.”

Panelists noted that the process behind designing a pilot program is complex. “Nothing is simple in health care,” Feder said. She underscored that a successful payment program would allow for collective decision-making between patients and doctors, efficient communication between health care providers, high quality standards, and strong patient protections. De Brantes also noted that the definition of a medical “episode” must be standardized in order to have a functional bundled payment system.

Despite these complex issues, the panelists agreed health care reform through payment bundling was worth it. “It’s about care improvement. We want to communicate that message loud and clear,” said Gilfillan. “We are talking about another way to encourage a delivery system to improve the delivery of care.” Bundling would improve the health care system by incentivizing care providers to treat patients as effectively as possible, instead of incentivizing providers to keep hospital beds full to suit their bottom line.

The pilot program is scheduled to begin by January 1, 2013, and continue until 2018. Yet it could be expanded if the pilot is expected to reduce Medicare spending while improving, or not reducing, quality and not limiting Medicare’s coverage or benefits for individuals. This makes it all the more important that the pilot program be designed effectively. “Passing the affordable care act was not the end of our efforts to reshape and reform the health care system. It was more like the end of the beginning,” said DeParle. Future payment bundling programs, she said, should work toward “higher quality health care at a lower cost.”

Click here to read the CAP report on health care bundling. Find out more about CAP’s plans to reform the American health care system on our health care page and stay on top of the news at ThinkProgress Health.

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