Effort to adopt bundled payments across California falls short of goals


A pilot program intended to implement and test a cost-saving strategy for orthopedic procedures at hospitals in California failed to meet its goals, succumbing to recruitment challenges, regulatory uncertainty, administrative burden and concerns about financial risk, according to a new RAND Corporation study.

The outcome represents a disappointing effort to widely adopt bundled payments, a much-touted strategy that pays doctors and hospitals one fee for performing a procedure or caring for an illness. The strategy is seen as one of the most promising ways to curb health care spending.

Researchers evaluated a three-year effort coordinated by the Integrated Healthcare Association beginning in 2010 to adopt bundled payments for orthopedic procedures such as a total knee replacement surgery among commercially insured people under age 65.

The project had such a low volume of cases that there was not enough information to draw conclusions about how bundled payments affect health care quality or costs, the initial goals of the study. The findings are published in the August edition of the Journal of Health Affairs.

"Bundled payments have great promise for controlling health care costs, but thus far efforts to put the strategy in place on a wider scale have struggled," said Susan Ridgely, the study's lead author and a senior policy analyst at RAND, a nonprofit research organization. "We've learned lessons from the early setbacks, but more work still needs to be done to realize the potential of this model of payment."

RAND Corporation, Susan Ridgely, US