Surprise: Bundling is Hard
The RAND Corporation’s study evaluated the first three years of the PROMETHEUS Payment program, a major pilot of bundled payments conducted by the non-profit Health Care Incentives Improvement Institute…
[R]esearchers conducted telephone interviews and site visits from 2009-2011 and found, as of May 2011, no bundled payments had been made and no payment contracts for bundled payments have been executed. The lack of progress was principally due to a mix of technical and cultural difficulties, such as deciding what health conditions should be subject to bundled payments and convincing providers that cost-cutting measures will not reduce the quality of medical care.
See news story, a defense of bundling in Health Affairs and my previous post on why bundling should be left to the marketplace.
It is difficult for CMS to arbitrarily decide what the bundles should look like and what the price should be. In business, numerous firms create bundles and consumers reward the most efficient ones (or the ones they perceive to be of value). Over time firms learn from each other (or go out of business). Repackaging and repricing bundles is not really something CMS can do from the top down and make work in the same fashion as if it were a natural experiment by competitors.
Another shining example of why command economy approaches to health care, or any good or service, don’t work; and why, as outgoing CME head Berwick, admits, there’s so much waste. Given the collective intellect in Washington, however, we’ll just keep on making the same mistake. Hey, it’s not their money!
Bundling is hard? No kidding.
This will be a surprise only to people inside the Beltway.
The question is: what happens when CMS moves forward with bundling and what sort of inefficiencies will it create?