As bundled payments take off, the groups paying for medical care and those providing it continue to diverge over the direction these payment models should go, the latest annual survey of bundled payments by the consulting firm PricewaterhouseCoopers shows.
The survey shores up the view that while bundled payments unfold across the U.S., so do differing ideas about their scope, feasibility, and effectiveness in improving healthcare value.
“If bundles are going to move the needle in terms of total medical costs, it's got to be more than just total joint replacements,” said Anne Wong, a director at PwC in its healthcare advisory practice, and one of the leaders of the survey. “It's just not big enough yet,” she said of bundled payments.
Most people on the receiving end of care, meanwhile, have little idea of what bundled payments are, the survey found. Once it was explained to them, they generally favored the concept of a set cost for all care surrounding one medical procedure, like a hip replacement, or condition, like diabetes.
PwC has conducted this survey every year since 2012, asking payers, physicians, employers, hospitals and consumers for their attitudes on bundled payments. This latest survey focused on the latter three -- 277 employers, 261 hospitals and 1,000 consumers.
For PwC, a consulting firm, the different ideas that payers and employers have about bundled payments spell business opportunity. "The misalignment between supply and demand points to a clear set of opportunities for healthcare stakeholders," said the report.
To date, 31% of hospitals have adopted bundles in some form, as have 20% of employers, PwC's survey found. 52% percent of hospitals were interested in adopting bundles but had yet to do so.
Employers expressed more interest in bundles encompassing chronic conditions and long-term diseases, including diabetes, obesity, and breast cancer. Hospitals preferred bundles for acute and procedural conditions, like bronchitis, heart attacks, or pneumonia, the survey found.
The exceptions were behavioral health and congestive heart failure, for which hospitals showed slightly more interest in bundles than employers did.
The discrepancy between the bundles that hospitals and employers prefer stems from considerations of cost and risk, Wong said. Employers hope to reduce the cost of chronic conditions, which tend to be their biggest drivers of healthcare spending. For hospitals, acute events are considerably easier to define and manage in a bundled model.
“When you're talking about caring for a diabetic patient, there are so many variables that go into how you care for them, and how you manage episodes of higher acuity,” Wong said. Pricing the episode is more difficult, as is getting it to "a place where it's worth a manageable amount of risk," she added.
In the actual implementation of bundled payments, hospitals remain consumed with preparing themselves by collecting data, reviewing care processes and improving their cost accounting. Their attention is devoted less to tasks outside hospital walls, like figuring out how to engage consumers or assessing the competition.
Although 69% of consumers had never heard of bundled payments, the payment model was vastly appealing once explained, PwC's survey found.
For 86% consumers, the concept was easy to grasp, and 80% said they would pick an ideal bundle over the current care they were offered -- a testament to their frustrations with multiple medical bills, providers who didn't coordinate with each other, and the mystery of how much a visit to the doctor will ultimately cost, Wong said.
The concept of bundled payments stretches back to the 1980s, when CMS started using DRGs, or diagnostic related groups, a system that allows one DRG to be assigned to a patient per hospital stay, so that payment covers all services during that stay. Later that decade, the UCLA Medical Center and Kaiser Permanente launched an organ transplant bundle.
Bundled payment initiatives and pilot models remained sporadic and isolated until the passage of the Affordable Care Act in 2010, when they began to catch on. Now, these payment models are helping to reshape the healthcare landscape in the broader push to wring more value from healthcare dollars.
Since 2010, the CMS has rolled out and subsequently expanded its voluntary Bundled Payment for Care Improvement Initiative to 6,000 participants and 48 conditions, and implemented its mandatory Comprehensive Care for Joint Replacement and, next year, is poised to expand that, too.