The Monday Memo
July 20, 2015 PITT DPT STUDENTS
Medicare is very close to beginning testing bundled payments in 75 areas around the country as soon as next year. The proposed options would include hip replacements and knee replacements, as well as the subsequent care that would follow the initial operation. The larger areas in talks to trial the programs are New York and Los Angeles, and would affect over 800 hospitals overall. The trial would run through 2020, at which point further decisions about the efficacy of the program would be made.
These bundled payments would be designed to ideally reduce the cost of these common procedures to Medicare, and therefore the taxpayer. As with similar bundled payment systems, like those currently in use here at UPMC and CRS, the payer would afford a single lump sum to cover the costs of all healthcare services required with the procedure, including the surgery, rehabilitation, follow-up appointments, etc. With each discipline allotted a certain amount, it is up to the healthcare provider to ensure that their care is both effective and profitable to them as a business. If the patient has successfully completed their need for services before the allotted number of visits, then the provider earns a profit. But if the patient requires more care, even after the allotted number of visits has been depleted, the provider must still complete the care for the patient, but on his or her own dime.
This type of payment system has been in development for years, and has been prototyped here in Pittsburgh for a period with significant cost reductions. Similar payment models are already in development for other common diagnoses that require periods of care, such as low back pain.
SPOTLIGHT: Good luck to all the recent graduates taking their board exams this week! You have all worked so hard to prepare for this moment, now go and reap the fruits of your labor!
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