Study: Bundling to Cut Health Costs is Hard to Achieve

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SANTA MONICA, Calif.―While there is considerable interest in bundling payments to health care providers to encourage them to cut costs, putting the strategy into practice is proving to be more difficult than anticipated.

That's the lesson being drawn from a new RAND Corporation study that examined the first three years of a major effort designed to test the bundled payment approach to healthcare financing.

Under bundled payments, doctors, hospitals and other health providers share one fee for treating all aspects of a procedure such as a hip replacement or a chronic disease such as diabetes. The approach is intended to encourage health providers to work together to eliminate unnecessary care and improve quality.

But three years after the PROMETHEUS Payment project was launched in three U.S. communities to test this approach, no bundled payments had been made and no payment contracts for bundled payments have been executed. Although all parties involved with the effort are committed to its success, researchers say the slow progress underscores the challenges such complex payment reforms must overcome.

"There is a tremendous amount of interest in this type of payment reform, but we found that transferring it into practice is extremely difficult," said Peter Hussey, the study's lead author and a policy researcher at RAND, a nonprofit research organization. "The model is very complex and the fact that it builds upon the existing fee-for-service payment system presents challenges."

The findings are published in the November edition of the journal Health Affairs.

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