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Medicare tests payment system it hopes will cut costs
Hospitals are interested in the new payment structure that Medicare announced Tuesday, but say they still need to look more closely at the program’s financial incentives.
The federal Medicare agency on Tuesday announced a new program that will “bundle” Medicare payments to various doctors and other healthcare providers.
The idea is to refocus payments so providers are paid for each “episode of care” — for example, the whole battery of tests and treatments performed on one patient who is admitted to a hospital. Currently, every doctor bills Medicare separately. Federal officials hope more integrated payments will lead to more integrated care.
“Today, Medicare pays for care the wrong way,” Health and Human Services Secretary Kathleen Sebelius said.
She said the existing system “can punish the providers who are most successful” at keeping their patients healthy, and described the new bundled payment program as a way to realign doctors’ incentives.
Nancy Foster, vice president for quality and patient safety at the American Hospital Association, said hospitals want to see better coordination of Medicare payments. Foster was still reviewing the details of what Medicare proposed, but she said it’s encouraging that the agency is allowing applicants to design their programs to meet local needs rather than establishing a single, nationwide model.
“That’s an appealing notion,” Foster said.
Hospitals and other providers have raised significant concerns about another effort to better coordinate healthcare services — accountable care organizations. Like bundled payments, ACOs are an attempt to pay for outcomes and give providers a financial incentive to make the switch.
Hospitals will have to weigh the financial upside of accepting bundled payments, Foster said, adding that it’s too early to know whether the incentives are strong enough.
Hospitals face a “critical decision” between investing in more integrated systems or adding new products and services under the existing Medicare payment structure, she said.
