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Return to Physician Payment Reform Introduction > Literature Review
Bundled Payment
(13). Cromwell J,
Dayhoff DA and Thoumaian AH. “Cost Savings and Physician Responses to Global
Bundled Payments for Medicare Heart Bypass Surgery” Health Care Financing
Review, fall 1997;9(1):41-57. http://www.ncbi.nlm.nih.gov/pubmed/10180001.Peer reviewed –
individual study Keywords: Bundled
payment; Medicare; CMS; demonstration; bypass surgery; episode of care; case
rate; evaluation Medicare’s Participating Heart Bypass Center Demonstration (1991-1996) selected four hospitals to receive a single payment covering both Part A (hospital) and Part B (physician) services for coronary artery bypass graft surgery. CMS did not permit any outlier payments. The amount of the combined payment was negotiated between 10% and 37% below the then-current payment levels. The hospital and physicians were able to decide how to split the combined payment.
A formal evaluation revealed that the participating providers, patients and Medicare all benefited. Physicians were able to identify ways to reduce length of stay and unnecessary hospital costs, resulting in cost decreases of 2% to 23% in three of the four hospitals. While the payments did not incorporate post-acute care, those costs also decreased. A subsequent evaluation (Liu, 2001) found that, after controlling for preoperative risk factors and postoperative outcomes, all four hospitals had significant reductions in total direct variable costs (those costs that vary with the number of patients treated) over the entire period of the demonstration. These cost reductions came primarily from the nursing intensive care unit, the routine nursing unit, pharmacy, and catheter lab. Furthermore, this study found that the cost reduction increased over time.
(14). Liu CF, Subramanian S and Cromwell J. "Impact
of Global Bundled Payments on Hospital Costs of Coronary
Artery Bypass Grafting" Journal
of Health Care Finance, Summer 2001;27(4):39–54.
http://www.ncbi.nlm.nih.gov.
Peer reviewed –
individual study Keywords: Bundled
payment; Medicare; CMS; demonstration; bypass; CABG; episode of care; case
rate; evaluation
- Medicare’s Participating Heart Bypass Center Demonstration (1991-1996) selected four hospitals to receive a single payment covering both Part A (hospital) and Part B (physician) services for coronary artery bypass graft surgery. CMS did not permit any outlier payments. The amount of the combined payment was negotiated between 10% and 37% below the then-current payment levels. The hospital and physicians were able to decide how to split the combined payment.
A formal evaluation revealed that the participating providers, patients and Medicare all benefited. Physicians were able to identify ways to reduce length of stay and unnecessary hospital costs, resulting in cost decreases of 2% to 23% in three of the four hospitals. While the payments did not incorporate post-acute care, those costs also decreased. A subsequent evaluation (Liu, 2001) found that, after controlling for preoperative risk factors and postoperative outcomes, all four hospitals had significant reductions in total direct variable costs (those costs that vary with the number of patients treated) over the entire period of the demonstration. These cost reductions came primarily from the nursing intensive care unit, the routine nursing unit, pharmacy, and catheter lab. Furthermore, this study found that the cost reduction increased over time.
To help manage care, Geisinger adopted a set of best practices to reduce
complications among its CABG patients. It also developed and executed a
"patient compact" designed to engage patients. A small study
(Casale, 2007) compared the 117 patients in the intervention with 137 patients
from a year prior to the implementation and found that hospital costs decreased
by 5%.
(16). Casale A, Paulus RA, Selna MJ, Doll MC, Bothe AE
Jr, McKinley KE, Berry SA, Davis DE, Gilfillan RJ, Hamory BH and Steele GD,
"'ProvenCareSM': A Provider-Driven Pay-for-Performance Program for Acute
Episodic Cardiac Surgical Care" Annals
of Surgery, October 2007;246(4):613–621. http://journals.lww.com/annalsofsurgery/Abstract/2007/10000/_ProvenCareSM___A_Provider_Driven.13.aspx. Peer reviewed –
individual study Keywords: Bundled
payment; CABG; bypass; Geisinger; ProvenCare
- Pennsylvania’s Geisinger Health System implemented ProvenCareSM in 2006, comprised of a bundled payment system for all non–emergency coronary artery bypass graft (CABG) procedures. The payment included the estimated cost of a typical hospitalization plus half of the average cost of post–acute care for the 90-day period following surgery. More specifically its elements were the preoperative evaluation; all hospital and professional fees; all routine post-discharge care, and management of any complications occurring within 90 days of the procedure.
To help manage care, Geisinger adopted a set of best practices to reduce complications among its CABG patients. It also developed and executed a "patient compact" designed to engage patients. A small study (Casale, 2007) compared the 117 patients in the intervention with 137 patients from a year prior to the implementation and found that hospital costs decreased by 5%.
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