My long-time self-paying patient opined that the end of fee-for-service payments (payment for what you get) was imminent. I lightheartedly asked her how physicians would be paid. Would they be housed in military barracks and given vouchers for necessaries?
Perhaps she read section 3023 of the “Patient Protection and Affordable Care Act” (PPACA or “ObamaCare”), the National Pilot Program on Payment Bundling, which applies to certain Medicare beneficiaries. The program’s stated goals are to improve access to care, quality, coordination, and efficiency (i.e., reduce costs) of services. Pilot programs, which started this year, will be conducted for 5 years, or longer if extension results in improved quality and reduced spending.
An earlier “pilot program” on payment by diagnosis (DRG or diagnosis related group), regardless of what the patient did or did not receive, simply became national practice in 1983 without looking at the results. Then there’s the HMO method of payment by the head (capitation), regardless of care or lack thereof. How will payment by the bundle be different?
A bundle or an episode of care includes the three days prior to admission to the hospital, the hospital stay, and 30 days (not 31 days) after discharge from the hospital. It comprises “applicable services:” acute inpatient services, all physicians’ services in and outside the hospital, outpatient and emergency room services, all post-acute care services (e.g., skilled nursing facility, rehab, home health), and other services the Secretary deems appropriate.
The amount of payment will depend partly on “quality” measures developed by the Secretary in consultation with the Agency for Healthcare Research and Quality. The measures include: functional status improvement, reducing rates of avoidable hospital readmissions, rates of discharge to the community, rates of admission to an emergency room after hospitalization, incidence of health care acquired infections, efficiency measures, measures of patient-centeredness of care, and measures of patient perception of care.
What do these things mean? Does “functional status” mean ability to perform ADLs (activities of daily living)? What if patient is so disabled that his ability to do ADLs can’t improve? What if he still needs a lift to get to the toilet, but can now beat his grandson at gin rummy? Does that count as an improvement? What about the ultimate measure of functional status—being alive rather than dead? Might a hospital’s “efficiency” rating be better if the patient dies, instead of being readmitted or acquiring an infection?
The bundle will be characterized by a code from the soon-to-be-required U.S. ICD-10CM system. This International Classification of Diseases—Clinical Modification system is based on the 1992 World Health Organization ICD-10 codes. It increases the number of diagnostic codes in the current ICD-9 system from 17,000 to 68,000, including different codes for right or left side. Providers will have to be much more specific in their coding.
Even though providers will have to do much more work to code and do other documentation tasks, the bundled payments cannot be more than what would otherwise be paid for the beneficiary’s care. It is not clear who all will have to share the payment—perhaps the hospitalist, perhaps the patient’s own physician, along with all the team members needed to provide whatever the Secretary deems appropriate.
The changes in “payment methodology” may be seen as a power struggle. Rick Mayes wrote in 2007, “For the first time, the federal government gained the upper hand in its financial relationship with the hospital industry. Medicare’s new prospective payment system with DRGs triggered a shift in the balance of political and economic power between the providers of medical care (hospitals and physicians) and those who paid for it—a power that providers had successfully accumulated for more than half a century.”
Some claim that bundling is a way to save Medicare, previous measures including the Sustainable Growth Rate (SGR) fee cuts having failed. In reality, it simply adds to the opportunity for bureaucratic bungling, while moving payment still further away from the value of care to real live patients.
Instead of more complex formulas, we need more transparency so that beneficiaries can make their own informed decisions about their individualized medical care, without interference from bureaucrats and the special interest groups that feed on the current muddled system.