MedPAC Backs Bundled Pay for Hospitalization


WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but should be made public by the third year, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians.

The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., said he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

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