Bundled payments may be more cost effective than ACOs

A new report on the Medicare program's attempt to remake the nation's healthcare finance system praised accountable care organizations (ACOs) but also pushed for the continued use of bundled payments to facilitate lower-cost, higher-quality care.

In the report, the Center for American Progress (CAP) asked the Centers for Medicare & Medicaid Services (CMS) to continue to expand the Medicare Acute Care Episode demonstration program and participate more in the Bundled Payments for Care Improvement initiative.

The report did note that ACOs, particularly those participating in the Pioneer ACO program, cut spending, but by a modest 0.67 percent per year. Such ACOs did not always fully address lingering questions regarding improving quality of care.

"Our analysis of financial performance and the independent evaluation of actual spending show that Pioneers' overall savings to date are small, and the results highlight the gap between a few organizations with high savings and the rest of the Pioneer ACOs," the report said.

CAP said bundled payments were perhaps even more key to reforming healthcare finance because they addressed specific issues of care and quality directly and could be more quickly adopted than ACOs.

However, bundled payments have come under scrutiny. Although some prominent members of the healthcare community say they could be quite successful in the long run, questions have been raised in other quarters regarding their effectiveness in cutting costs while maintaining quality.

"Accountable care organizations will remain an important part of Medicare's payment reform efforts, and CMS should continue to improve programs such as the Pioneer ACO Model and allow more organizations to achieve success over time," Topher Spiro, vice president for Health Policy at the Center for American Progress and co-author of the report, said in a statement. "But if Medicare is going to achieve its goal of moving away from fee-for-service payments, it must focus greater attention on bundled payment models."

To learn more:
- read the CAP's report (.pdf)
- check out its statement