Making health care better by bundling
By Suolan Jiang on 07/20/2011 @ 04:00 PM
A panel of specialists discussed how the Affordable Care Act could improve the quality of the health care at the Center for American Progress (CAP) early this week. The Affordable Care Act, which was signed into law in 2010, will bring benefits that will improve the quality of our health care and lower its costs. According to CAP, the biggest change of the Act is to “bundle Medicare payments around ‘episodes’ of hospital care—paying collectively for the services that an individual receives during and after hospitalization.” This change would “have the potential to address two critical cost drivers in the health care system—volume and fragmentation.”
Nancy-Ann DeParle, the White House Deputy Chief of Staff, introduced the Affordable Care Act and explained why it is important to the United States. According to her, the new Act can “stop fraud before it happens” and patients would no longer “pay for gaps and failures”. This single change is expected to save 5 billion dollars over the next 10 years. To protect and supervise the new system, a new government agency, the Independent Payment Advisory Board, was created mainly to give Congress and Senate more time to solve problems and prevent costs from skyrocketing. Moreover, the partnership of patients, doctors, health plans, hospitals together will make care safer. All in all, the new Act will “drive cost down and quality up”.
Judy Feder, the author of Issues and Recommendations for the New Pilot Program in Medicare, pointed out why the bundling strategy is critical to the success of the new Act and offered great advice. First, she suggested that hospitals to be used as an “episode”, namely, a set of services a patient need during a certain period. Hospitals can best be served by “bundling” payments since they have a high volume and will stimulate broad participation. Second, Centers for Medicare & Medicaid Services should use its strains to facilitate collaboration and reduce fragmentation since it is really difficult for all the parts to come together. Third, high transparency is needed for the system to work because it will help patients get updated information and participate in decision making.
According to Francois de Brantes, the National Coordinator of Prometheus Payment, the “bundling” payment is not a new idea – it was first put forward in mid 80s but wasn’t realized due to three main reasons. First, a lack of standard definition of what an episode is. Due to the vagueness of the definition, private and public sectors have no criterion to use when they were trying to implement episode of care payment. Second, a lack of operational infrastructure, which means all the payments have to be processed by manual reconciliation. However, thanks to accounting and modern technology, this barrier has eventually been removed. Third, a lack of desire on a delivery system to collaborate around a payment effort on a fragmented system. To conclude, Mr.Brantes pointed out that since technical difficulties have gone away, the complexity of human behavior change becomes the biggest obstacle in implementing the new program.
Richard J. Gilfillan, M.D., the Acting Director of Centers for Medicare & Medicaid Services, showed great concern about encouraging people to support the new payment mechanism. He raised four questions: “How do you change mind sets?” “Where are we going to focus, acute or chronic?” “How to go to the market?”, and “How do we measure success?” These questions take time and effort to answer. He also pointed out two biggest challenges: It is not only hard for hospital administrators to push volunteer medical staff to do stuff, but also expensive to ask doctors to engineer care. One way to solve these problems is to think on retrospective and prospective perspective. “Opportunities to come, but not yet here today.”, Mr. Gilfillan said at the end of his speech.
Watch the full version of the discussion here.
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