The Issue
Fee-for-service reimbursement has been identified as a primary contributor to high health care costs in the United States, since doctors and other providers earn more for delivering a higher volume of services, regardless of medical need. Among the alternative payment arrangements that have been proposed to better incentivize and support high-performing health care is bundled payment. Under this method, providers receive fixed payments upfront for delivering a broad array of services to each patient.
Bundled payment arrangements create stronger incentives for providers to become more efficient, while also allowing them greater flexibility to determine the most effective use of health care resources. Because they are not limited in providing only those services deemed reimbursable under a fee schedule, doctors may be more willing to use such services as e-health or nurse discharge planning, which offer high value but are not reimbursable under many fee-for-service arrangements. In addition, when linked to performance standards, bundled payments can help ensure that high-quality care is delivered.
What the Study Found
As part of this Commonwealth Fund–supported study, researchers developed a bundled payment approach, called the Primary Care Activity Level model, to cover the cost of all services that primary care practitioners provide. The intent is not only to promote more efficient care but to better support the use of primary care services. The model has already been adopted by the Capital District Physician’s Health Plan, a nonprofit, network model health plan in New York State.
Using national medical claims data, the researchers demonstrated the applicability of the approach to a variety of provider types and populations. They also highlighted the importance of risk adjustment to appropriately reflect the variation of costs and complexities associated with treating a wide range of patients.
Conclusions
Although the study focused on primary care reimbursement, the authors believe their approach could apply more widely to other services and provider types. "Risk adjustment for fundamental payment reform is ready for implementation," they conclude.