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Health Reform Pilot Projects Look to Transform Healthcare

Joe Cantlupe, for HealthLeaders Media, January 15, 2010

Buried in the healthcare reform bill are dozens of pilot and demonstration projects that may become a permanent part of the healthcare landscape. While proponents say the programs can reduce overall costs, skeptics argue that pilot programs hardly ensure success.

A key pilot program plan is proposed expansion and revisions of a national Medicare pilot program for bundled payments. Under bundled payments, doctors and hospitals are paid for all services of a patient in care, thus receiving a fixed amount per month or year for all covered services.

While the idea is to improve quality and control costs, as far as some physicians are concerned, bundling is bungling.

"Bundling is one of those double-edged things," says Patrick Torcson, MD, director of hospital medicine at St. Tammany Parish Hospital in Covington, LA, and chairman of performance and standards for the Society of Hospital Medicine. The concern on the part of physicians is that the partnership between physicians and hospitals in a private practice setting could result in inequities and physicians short changed."

Supporters of the voluntary pilot programs and demonstration projects say the federal proposals can potentially give the healthcare system a chance to evaluate the success or failure of them without needless expense.

"Most of them are pretty small budgets," says Timothy Jost, a law professor at Washington and Lee University, adding the government can spend $5 million on a pilot to get people healthy rather than spending $1 billion on established programs that don't work.

Besides the bundling program, other pilot or demonstration projects in health reform include:

  • A pilot program for continuing care hospitals, which combine rehabilitation, skilled nursing facility, and long-term services with acute care.

  • Further extension of the rural community hospital demonstration project.

  • A study, which would be followed by a demonstration project, that focuses on revising the home health prospective payment system to assure access to care and accommodation of patient severity of illness.

  • A demonstration project that involves shared savings and independence of home medical practice.

  • A three-year demonstration profit for 10 states to provide comprehensive care to the uninsured at reduced fees.

According to Torcson, the pilot projects generally are an improvement over a "large scale social experiment." He noted that "part of Medicaid itself was formed as a result of pilot projects—nine years of demonstration projects and tweaking from 1983. Pilot programs and demonstration projects moved things along."

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