Medicare payments: US encourages bundling

Medicare payments, if bundled, could save the US money. The agency that handles Medicare payments is trying to make incentives to base payments on the quality of care, not the quantity, says a government official.

Logan Westom / The Columbian / AP / File
Dr. Rick Nicoski, left, poses with Helen and Rick Gill at the Urgent Medical Clinic in Vancouver, Wash. After moving to the Pacific Northwest Helen, left, and Rick Gill had trouble finding a doctor that would accept Medicare until they found Dr. Rick Nicoski, because the federal government reimburse primary care doctors at a lower rate, especially in the Pacific Northwest. Now, the government is trying to encourage Medicare payment bundling to save money.

The U.S. agency that runs government health insurance is launching a program that would bundle insurance payments for multiple procedures in the hope of improving patient care while also saving money.

The Centers for Medicare and Medicaid invited providers Tuesday to help develop four models to bundle payments.

The program is meant to encourage hospitals, doctors and other specialists to coordinate in treating a patient's specific condition during a single hospital stay and recovery.

``Today Medicare pays for care in the wrong way,'' Health and Human Services Secretary Kathleen Sebelius told reporters on a press call.

``Payments are based on the quantity of care, and not on the quality of that care,'' she said. ``There is little financial incentive for the kind of care coordination that can help patients from returning to the hospital.''

The four models give providers flexibility on how they get paid and for which services, as well as give them financial incentives to avoid unnecessary or duplicative procedures.

``Hospitals and other providers recognize that they have to accommodate the current (fiscal) environment,'' said Nancy Foster, vice president for quality at the American Hospital Association, an industry group that represents hospitals and other providers.

She said that while some hospitals or doctors may get less money overall in a bundled payment, they will still get their costs covered and perhaps earn rewards for better coordinating care.

The CMS Innovation Center, created under President Barack Obama's healthcare overhaul last year, has been looking into bundling payments as part of a larger effort to improve patient care and reduce costs.

``From a patient perspective ... you want your doctors to collaborate more closely with your physical therapist, your pharmacist and your family caregivers,'' CMS Administrator Donald Berwick said in a statement. ``But that sort of common sense practice is hard to achieve without a payment system that supports coordination over fragmentation.''

For more about the program and the four proposed models, please see a CMS fact sheet at

About 45 million elderly and disabled Americans are enrolled in federal Medicare plans, which have come under heightened scrutiny as Congress tries to cut the U.S. deficit ahead of a November deadline. The government's soaring healthcare bill is one of the biggest contributors to the deficit.

Further cuts to the $427 billion Medicaid program also are likely at the federal level. The insurance program for the poor is funded jointly by federal and state governments, but administered by the states with federal oversight.

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