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Can 'Bundled' Payments Help Slash Health Costs?

TULSA — An hour into knee replacement surgery — with U2’s I Still Haven’t Found What I’m Looking For playing in the background — Yogesh Mittal smiles as he raises the left leg of his patient, 76-year-old Frank Morrow.

While holding Morrow’s thigh, the surgeon lets the bottom half of the leg fall. “Look at that,” he says, pointing to the wide range of motion permitted by the metallic-colored implant. “He’s going to love this new knee.”

Medicare, the government program that is paying for Morrow’s surgery, likes it, too.

The surgery at the 691-bed Hillcrest Medical Center here is part of an experiment testing a new “bundled” payment system. Medicare makes a single reimbursement for all the hospital and doctor care for heart and joint procedures, rather than making separate payments to the facility and physicians.

Such combined payments are getting close attention during the health care debate as a way to encourage hospitals and doctors to work together to hold down costs and improve care.

Bundling payments moves medical charges away from the traditional fee-for-service system that pays providers separately for individual services — an arrangement critics of the current system say leads to doctors and hospitals delivering more care, but not better care.

“The current payment system is not designed to drive efficiency,” says Harold Miller, chief executive of the Network for Regional Healthcare Improvement in Pittsburgh. For example, he says, it rewards providers for making mistakes that require additional procedures or result in hospital readmissions.

Health care bills being debated in Congress would promote bundling by calling for more Medicare pilot projects such as the one at Hillcrest and allowing Medicare to expand the concept if they are successful. Any success in the Medicare arena could have far-reaching implications because the health program for the elderly makes up 20% of the nation’s total health spending.

Some physicians have raised concerns about the bundling experiment. Larry Martinelli, an infectious disease specialist in Lubbock, Texas, and past chairman of the Infectious Disease Society of America’s clinical care committee, says he fears that bundling payments would pressure hospitals to try to save money by bringing on fewer specialists to consult on patients.

“The idea is worrisome,” he says.

Hillcrest’s Dobbs acknowledges that surgeons are looking more closely at when to bring in specialists or order tests.

“I see more focus than I saw in the past,” he says, adding that patient care has improved under the program because of closer attention to quality.

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