Hospital and behavioral-health company Universal Health Services may drop out of Medicare's voluntary test of bundled payments “until some of the kinks are worked out,” an executive said.
The King of Prussia, Pa.-based company is weighing whether to pull its 25 acute-care hospitals out of the Bundled Payments for Care Improvement Initiative, which included approximately 2,100 acute-care hospitals, medical groups and other facilities, as of last August. The news comes roughly one month before Medicare launches its first mandatory test of bundled payments across 67 markets.
Both efforts are central to the CMS' push to increase the number of Medicare agreements that reward hospitals for quality improvement and better cost control. Under bundles, Medicare will pay one amount for all medical care provided for the treatment of a specific condition, including the full length of a hospital stay and sometimes after care as well. Hospitals, doctors and other providers that hold costs below the bundled payment amount can keep the difference.
The voluntary bundled effort, underway since 2013, is testing payment arrangement across 48 conditions, including stroke, renal failure, heart attacks and diabetes. The mandatory effort, which begins April 1, is limited to hip and knee replacements.
As of this month, the CMS said there are more than 1,500 participants in the effort.
Universal Health Services' enthusiasm for Medicare payment bundles has faded as the company has struggled to get useful data from federal officials, Chief Financial Officer Steve Filton said in an interview.
“I think we're finding the data that Medicare are providing, both in terms of the amount and level and timeliness of that data, to be somewhat insufficient for us to be able to really participate in this in sort of a meaningful way and make meaningful changes,” Filton told analysts as he announced the company's 2015 financial results. “I think we're probably likely to actually step back our level of activity, and step back in when the program is working more efficiently and some of the kinks are worked out.”
UHS does see continued growth, however, in new payment models and has readied itself for the changing agreements. “We have, from an infrastructure perspective, prepared and feel very prepared for what we think is going to be the long-term trend in this industry, which are more coordinated, more collaborative payments,” he told analysts.
Filton said in an interview that UHS may not withdraw all its hospitals from the program in order to continue monitoring the effort's progress.
The company's hospitals saw growing demand and higher margins last year compared with the year before. Same-hospital admissions adjusted to reflect outpatient activity increased 5.4% last year, compared with the prior year. Operating margins increased to 18.5%, compared with 17.9% the prior year, the company reported.
Total revenue, which also included behavioral health, reached $9.04 billion for the year, an increase of 10.2% from the prior year. Expenses grew more slowly at 9% to $7.78 billion.
The company's net income for last year increased 24.8% to $680.5 million.
