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Employers to CMS: Want to Do Bundles Right? Emulate Us

By Philip Betbeze  
   October 26, 2017

"The federal government has experimented with these, and most people would say they have had mixed results, but in the private sector, those programs have been very successful in bringing lower costs, improved patient experience, and satisfaction," Kramer says.

Data from the PwC survey 2015/2016 Strategy& Annual Bundles Survey support the claim that bundles have helped hospitals and their patients alike, with the following findings:

  • 63% of hospitals realized savings from bundles
  • 69% of hospitals improved quality through bundles
  • 55% of patients were more satisfied with bundled service than previous service

PBGH manages the Centers of Excellence Network on behalf of several large employers.

"If Medicare wants to do them right, they should look at the experience of large employers," Kramer says.

To reduce federal spending on healthcare, Kramer says more bundle programs, not fewer, is the antidote to paying for these services through fee-for-service.

"It's important for Medicare and Medicaid to be partners with private sector purchasers to develop consistent ways to measure quality, consistent payment models, and ways to make consumers informed so they can make smart decisions," he says.

The government cannot continue to spend the amount it's been spending on healthcare, which is nearly 18% of GDP right now.

That's easily twice the amount spent by other developed nations, says Fildes.

"At this rate, the government will [soon] spend more on healthcare than the entire discretionary budget," she says. "Government can learn from strategies the private sector has used that have worked."

Better ACOs

A second example where government can learn from and coordinate with the private sector is in ACOs. Medicare ACOs have been developed under several categories, but results have been mixed.

Many ACOs in the private sector, by contrast, have been successful, say Fildes and Kramer.

One crucial way private sector ACOs are different is that under Medicare ACOs, beneficiaries don't choose the ACO, but are attributed to the ACO based on where they've been going for care. There's no active choice based on features, benefits, value propositions, or quality scores.

In the private sector, beneficiaries choose whether to join the ACO or not.

"There's active consumer engagement in the private sector models and patients are known to the ACO in advance, so the ACOs work with them closely to manage their care more effectively," says Kramer.

Whether the president or Congress will act upon these recommendations anytime soon is certainly doubtful at this point, as Republicans have seemingly moved on from meaningful legislative action and CMS remains leaderless following Price's resignation.

But regardless, Fildes and Kramer say these issues will only get bigger as healthcare continues to consume a larger share of GDP and the federal budget.

"We're moving in the direction of improved quality and reduced costs," says Kramer. "[Health system and physician leaders] want to move in that direction too but they want clinical and business models aligned so this will work."

Philip Betbeze is the senior leadership editor at HealthLeaders.

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