Patrick J. Torcson, MD, MMM, FACP, laughs when he recalls his initial reaction to the proposal to bundle Medicare payments to hospitals: “If this passes legislation, I’m moving to Dubai.”
Dr. Torcson, chairman of SHM’s Performance and Standards Committee, and medical director of the hospitalist program at St. Tammany Parish Hospital in Covington, La., has since tempered his thinking. Like many physicians, he understands the need for Medicare to address growing costs. Nevertheless, he is wary about the bundling proposal in June’s Medicare Payment Advisory Commission (MedPAC) report to Congress.
Dr. Torcson’s opinion about reforming the nation’s healthcare delivery system points to the difficult dichotomy facing hospitalists and other physicians: they agree change is necessary, but worry about the consequences of bundling payments.
Under the new model, rather than pay for each service provided, Medicare would reimburse a lump sum for all treatment linked to an episode of care for conditions such as congestive heart failure, chronic obstructive pulmonary disease or cardiac bypass surgery. In addition, the Centers for Medicare & Medicaid Services (CMS) would provide hospitals and physicians with reports detailing their resource use and readmission rates for specific episodes of inpatient care. After two years, the providers’ reports would become public.
Another proposal would cut payments to hospitals with high risk-adjusted readmission rates for select conditions while urging Congress to ease gainsharing restrictions to financially reward physicians helping hospitals improve readmission rates and overall patient care.
—Eric Siegal, MD, chairman of SHM’s Public Policy Committee and regional medical director for Cogent Healthcare
The switch to bundling, Dr. Torcson says, could entice hospitalists to encourage a healthcare delivery model that fosters collective accountability. He and other physicians warn the system could just as easily create imbalances in power, provide incentives for withholding care and spell disaster for rural physicians and ill-prepared networks.
“Philosophically, it’s a nice idea, but I don’t think it’s realistic and I don’t think hospitals that have a small budget will be able to survive it,” says Rachel Lovins, MD, director of the hospitalist program at Waterbury Hospital in Connecticut. Dividing a bundled payment equally amongst hospital departments “will be close to impossible,” she says, and struggling hospitals will fall further into debt. The new system also may leave providers with inadequate resources and lead to angry outpatient doctors who refuse to accept Medicare patients.
Part of the problem, according to Eric Siegal, MD, chairman of SHM’s Public Policy Committee and regional medical director for Cogent Healthcare, is how little physicians know about the effects of the new plan. “Everyone understands that this is a dramatic paradigm shift,” he says. “Bundling is a really radical change. It’s going to generate all kinds of consequences—intended and unintended—and no one really has a handle on what’s going to happen.”
The Status Quo Must Change
One of few points of agreement is that the status quo is untenable. A recent summary of MedPAC’s report in The New England Journal of Medicine blamed the fee-for-service model for fueling negative aspects of the current healthcare system and warned of an escalation in Medicare spending. “Fee-for-service payment spurs spending growth, supports a fragmented and compartmentalized delivery system and does nothing to reward quality or value,” the MedPAC authors write.
Though some physicians remain cautiously optimistic about bundling, Dr. Siegal doubts the model is ready for primetime. “Bundling says, ‘Let’s create accountability for outcomes by not paying for single services but for an entire episode of care,’” he says. But many questions remain unanswered. What constitutes an episode? Who controls the allocation of the Medicare payment? If an episode is defined as 30 days from when a patient enters the hospital for a specific procedure, are other health providers accountable for addressing unrelated complaints within the same episode window?