Bundled payments: Lessons learned


As insurers move forward with bundled payment initiatives, they would benefit from learning from the experiences of programs that haven't succeeded. Though many bundled payment initiatives have improved quality and lowered costs, as FierceHealthPayer previously reported, some aren't as fortunate.

In a new Health Affairs blog post, two policy analysts discuss a bundled payment project they ran, called the Integrated Healthcare Association (IHA) bundled payment demonstration that failed to achieve its original objectives. Through their experience, they offer some key lessons that can help other insurers.

"None of the barriers encountered in IHA's demonstration signal a 'death sentence' for bundled payment," M. Susan Ridgely, senior policy analyst at the RAND Corporation and principal investigator for IHA, wrote in the blog post. "However, the demonstration clearly shows that bundled payment is difficult to implement."

One issue is deciding whether to provide bundled payments prospectively or retrospectively. The latter would simplify the implementation and administration of bundled payment programs. But it doesn't necessarily address the issue of excluding so many patients from the program that there isn't enough volume. IHA chose a prospective payment model, which led to concerns regarding whether participating providers were assuming insurance risk as well as how existing copayments and coinsurance would be applied.

Care design is also an important factor when creating bundled payment programs. That's because successful bundled payments demand that care delivery is improved. "Bundled payment provides the impetus, but the work of care redesign must follow if the promise of bundled payment is to be realized," Tom Williams, who leads IHA, wrote in a separate Health Affairs blog post.

To learn more:
- read the Health Affairs blog post about lessons learned and the post about care design.

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