Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HIMSS 2023
  • Opinion
    • Breaking Bias
    • Commentaries
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - AI and Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Government
July 30, 2016 12:00 AM

Editorial: Full speed ahead on bundled payments

Merrill Goozner
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Goozner

    Rulemakers in outgoing administrations usually end their tenures with a bang, not a whimper. President Barack Obama's appointees at the CMS are no exception.

    Over the objections of most healthcare provider trade groups, the agency last week proposed expanding its mandatory bundled-payment program to include heart attacks and coronary artery surgery in 98 markets. It also extended the purview of the orthopedic joint replacement bundles, just getting started in 67 markets, to include hip and femur fractures.

    As Modern Healthcare's Elizabeth Whitman notes in her cover story, this expansion will force hospitals in these markets to focus greater attention on post-acute care, where there is substantial variation in quality. It's also an arena plagued by overutilization, underutilization and fraud.

    Bundled payments will force hospital administrators to take those problems seriously. In essence, it puts them in charge of rooting them out.

    The agency last week also released its first hospital star ratings, whose methodology has come under criticism from major hospital groups. The American Hospital Association complained the composite scoring of 64 quality variables, already reported on the Hospital Compare website, unfairly penalized teaching hospitals and those serving the poor.

    Yet the average 2.88 star rating for safety net hospitals was only marginally lower than the average of 3.09 stars for non-safety net hospitals. What should be of greater concern to the AHA and everyone engaged in improving the quality of America's healthcare system was the scant 102 of 4,599 hospitals nationwide that earned five stars.

    Is this too much too soon? No doubt the administrative burden on hospitals whose internal accounting systems are still firmly rooted in fee-for-service medicine is growing sharply.

    In addition to the expansion of mandatory bundled payments, hundreds of hospitals are also involved in the CMS' voluntary bundled-payment and accountable care organization programs. Just as burdensome are the growing number of value-based payment arrangements between private insurers and providers.

    But let's not lose sight of the larger goal. Payers, led by the government sector, which is already about half of all payments, are moving inexorably toward putting providers at risk for excessive cost growth. Moving to mandatory bundled payments in key service lines will force providers to develop the accounting systems they need. Indeed, true cost-accounting in healthcare is long overdue.

    It also will give hospitals and systems incentives to expand their care coordination infrastructure. Experts at the AHA Leadership Summit in San Diego last month claimed post-acute care accounted for one-fifth to one-third of total costs of any episode of care. The ACOs that made money under the CMS' Pioneer program did so by reducing those costs by 20% on average—by far the largest source of savings.

    Yet there is a two- to three-fold difference in post-acute care use in different areas of the country with no noticeable impact on outcomes. Mandatory bundles will encourage hospitals and systems to make better use of this key component of care.

    For years, the CMS was criticized for initiating payment reform demonstration projects that never led to systematic change. Now that it is pushing mandatory changes, it is getting attacked for overreach.

    If healthcare leaders' commitment to value-based payment is real, why wait? As the movement to adopt quality indicators proved, the gap between good and poor performers narrowed considerably once the data on performance went public. Benchmarking against your peers is a powerful motivator. We can expect the same on bundled payments, because providers' bottom lines are at stake.

    And as for the star ratings for hospitals, they will no doubt become a frequently used tool in the coming era of consumer-driven medicine that will inspire the laggards to figure out how to become a four- or five-star hospital.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    congress prescription drugs
    PBMs, Big Pharma face off in House hearing
    Biden COVID copy_i_i.jpg
    Biden administration asks employers to help more workers who lose Medicaid
    Most Popular
    1
    Centene to lay off 2,000 workers
    2
    How health systems are battling price-gouging allegations
    3
    Senate advances bill to temporarily aid hospitals, health centers
    4
    Elevance, Blue Cross Louisiana halt $2.5B proposed deal
    5
    Tower Health to sell urgent care centers, close others
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing