What can we learn from US evidence about bundled payments?
Bundled payments are one of the newest funding mechanisms being piloted in countries like the US. Bundled payments are when a single payment is provided for an acute care episode that covers all costs, including acute and post-acute care, for a patient’s episode of care – following their trajectory between setting, different providers and over time. For more information see Bundled Payments.
The feasibility of studying the trajectory of care for patients is also something that is being explored in Canada, particularly in Ontario, where linking healthcare utilization over time opens up the opportunity to a wider set of longitudinally-based quality and appropriateness measures, and fits within the context of Ontario’s Quality-based Pricing (QBP) initiative. QBPs are identified clusters of patients with clinically related diagnoses or treatments where the evidence shows that there are opportunities for improved outcomes and cost savings. Healthcare providers will be reimbursed for the types and quantities of patients they treat, using prices based on the quality of care delivered.
Sood et al (2011) looked at the design of bundled payments in the US National Pilot Program on Payment Bundling. This article examines design considerations for the bundled payment pilot project and determines that, according to Medicare data, hip fractures and joint replacements are good conditions to include, due to their potential to drive cost savings for Medicare. The authors conclude that longer episodes of care are more suitable for bundled payments since longer episodes cover most of the costs and readmissions – but add little in the way of financial risk to US providers.
This article makes us think about the future applicability of bundled payments for funding episodes of care in Canada, and what some of the design differences would be. While costs of care and the overall sustainability of the healthcare system is a consideration in Canada, the more pressing reason to adopt bundled payments is related to quality, as bundles can address gaps in care between the acute care and post-acute care settings. By providing incentives to coordinate care across settings, it is hoped that better outcomes are achieved for patients.
The potential for bundled payments to improve efficiency and effectiveness in the US Medicare system is fairly clear. However, before provinces can even consider developing longitudinal measures of quality and effectiveness for patients’ episodes of care, the underlying data has to exist and be linkable. In some provinces, emergency department data are not available, in others, long-term care, home care or assisted living data are not available in a form that describes the nature of services provided, patient functional status or the cost of services. Before complex issues, such as who should receive a bundled payment, are tackled, data issues must be acted upon.
One of the most important considerations for implementing bundled payments in Canada would be choosing who is in charge of receiving and doling out the payment. In the US, market mechanisms provide a relatively straightforward method to sort this out. However, in Canada, such structures do not exist or are unfamiliar to healthcare providers. Should the payment go to the hospital? What are the potential system effects of giving hospitals in Canada control of bundled payments? Will this help or hinder the overall agenda of reform to move away from expensive hospital treatments and towards more primary care? These are all important considerations with few easy answers raised by the intriguing possibility of enacting bundled payments in Canada.
Sood N, Huckfeldt PJ, Escarce JJ, Grabowski DC, Newhouse JP. Medicare’s bundled payment pilot for acute and postacute care: analysis and recommendations on where to begin. Health affairs (Project Hope). 2011 Sep 7;30(9):1708–17.
