RAND: Bundled payments the best way to contain healthcare costs

Analysts at RAND Corp. have thrown their weight behind the use of bundled fees to pay physicians and hospitals, concluding that while implementing such a system would be difficult, it's probably the best way to control health system costs.

The RAND study, which appears in the New England Journal of Medicine, notes that several other approaches all show some promise for cost control. These include the adoption of electronic medical records, use of lower-cost settings like retail clinics for care, use of lower-cost providers like nurse practitioners and programs that manage chronic disease more effectively.

However, when all is said and done, bundled payments still seem to be the most promising approach for lowering costs, the study concludes. In particular, the analysts said, bundled payments need to be applied to treating seven chronic conditions (diabetes, coronary artery disease, congestive heart failure, hypertension, asthma, COPD, GERD) and three acute conditions (AMI, strokes and pneumonia) or procedures requiring hospitalization, all identified in the Prometheus payment model. (The non-profit group behind Prometheus likes to emphasize that it's not dealing in bundled payment, but actually "bundled budgets" which give clinicians more incentives to collaborate.)

If bundled payments are implemented, optimistic estimates conclude that they could save the system 5.4 percent in costs over 10 years.

However, even the researchers admit that there are major obstacles to implementing bundled payment--and physicians and hospital leaders strongly agree. That being said, as evidence continues to accrue that this form of reimbursement makes sense, providers will doubtless be forced to adapt.

To learn more about this study:
- read this UPI piece
- read this RAND press release

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