Pilot program will test bundled fees on knee, hip replacements

In an experiment modeled after Medicare's bundled payment pilot programs, several California hospitals this summer will begin charging bundled fees for knee and hip replacements.

Four insurers, Aetna, Blue Shield of California, CIGNA and HealthNet, have agreed to pay bundled facility and physician fees at the pilot hospitals. The precise fees have yet to be determined, but advocates, including the insurers, believe that greater cooperation among healthcare providers will ultimately slow the rise of spending and drive down insurance premiums, The Los Angeles Times reports.

"The bundled payment is a step in the right direction ... but it's no panacea. We're taking baby steps in rethinking how these payment methodologies can provide the right kinds of incentives," Dr. Thomas Rosenthal, chief medical officer of the UCLA Hospital System, told the newspaper. UCLA is among the hospitals and health systems taking part in the pilot. Others include Cedars-Sinai Medical Center, Hoag Memorial Hospital and Presbyterian Hospital.

"The idea is to provide an incentive for doctors and hospitals to sit down together to figure out the best way to care for their patients," said Weslie Kary of the nonprofit Integrated Healthcare Association, which is heading up the California experiment.

Even supporters note the limitations of the bundled payment model in managing chronic conditions such as diabetes. And some critics say bundling could even drive up costs by giving hospitals and doctors greater influence over price negotiations with insurers.

Nonetheless, hospital executives around the country will want to watch the project closely. "Doctors and hospitals are keenly aware that it's in their interest to provide high-quality care in as efficient a way as possible," Cedars-Sinai Chief Executive Thomas M. Priselac told the Times. "This is an opportunity to examine whether there is a different way to achieve those goals."

To learn more:
- read the Los Angeles Times article 
- see the Integrated Healthcare Association's synopsis of the program
- read this report in Becker's Hospital Review