Saturday, March 30, 2013

Consolidation and Bundling in Medicare 

There is a move afoot to consolidate Parts A and B of Medicare and to move away from fee-for-service in favor of what is called bundled payment.  Bundled payment means either a single fee for an episode of care (like a heart attack or an appendectomy) or a single monthly payment along the lines of the traditional HMO.  The March 29 New York Times carries an article reporting that this is one of the few things upon which the Republicans in Congress and the Obama administration agree. 

You probably have to be as much of an old timer in health care as I am to appreciate what a big deal this is.   

Medicare was enacted in 1965 in the face of fierce opposition by the American Medical Association, one of the most powerful lobbying groups of the time.  Following the pattern set earlier by Blue Cross and Blue Shield, payment to doctors (Part B) was kept separate from payment to hospitals (Part A).  Being aware of the old adage that “he who pays the piper calls the tune,” the medical profession insisted on that as a means of assuring its independence from any sort of institutional control. 

That independence reflected the concept that doctors should be accountable only to their patients.  That sounds laudable enough, but precludes meaningful accountability for the cost and quality of care. 

Consolidating Parts A and B of Medicare and moving to bundled payment would change all that.  Somebody has to take the fee and pay all the caregivers, including doctors and hospitals.  With the exception of large group practices like Mayo and Cleveland Clinic, that is not likely to be a physician controlled entity, meaning that in most cases the physicians will be getting paid by a hospital. 

The Times article made no mention of that.  The only issue that it discussed had to do with deductibles.  Part A has a higher annual deductible than Part B so consolidating them into one is likely to affect some beneficiaries unfavorably. 

I’ve long thought that the providers of health care ought to be unified, but never thought I’d live to see it.



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