November 11, 2009 / 10:48 PM / 10 years ago

Bundled payments a way to cut health costs: study

WASHINGTON (Reuters) - One of the best ways to control U.S. healthcare spending is to pay doctors, hospitals and other health providers a single set fee for treating all aspects of a surgical procedure or a chronic disease such as diabetes, researchers said on Wednesday.

Although such a “bundled payments” approach does not figure in current U.S. healthcare reform legislation, it would go a long way to controlling costs, the team at the non-profit Rand Corporation said.

“Fee-for-service payments, today’s dominant mode, encourage higher volume rather than better value,” Rand’s Peter Hussey and colleagues wrote in the New England Journal of Medicine.

The Congressional Budget Office has estimated that bundled payments could save the U.S. healthcare system about a billion dollars a year but the Rand team said broadening the approach, already used by Medicare in some areas, could save more than that.

“We find that there would be greater opportunities in bundling payments for the treatment of chronic diseases and in applying the model to all payers,” they wrote.

The U.S. House of Representatives has passed healthcare reform legislation and Senate leaders are now working to finalize a bill. If the Senate passes its legislation, the two versions would have to be reconciled into a single bill that would go to President Barack Obama for his signature.

The overhaul would lead to the biggest changes in the $2.5 trillion U.S. healthcare system — which accounts for one-sixth of the economy — since the 1965 creation of the Medicare government health insurance program for the elderly.

Both bills mostly address the issue of insurance but Obama, who has made healthcare reform his top domestic priority, has called for legislation that would also cut costs and improve the quality of the U.S. system, which most studies show is the most expensive per capita in the world while delivering mediocre results.

The Rand team said that if the new model were to work, it would have to be applied to the treatment of six common chronic diseases such as diabetes, heart disease, cancer and chronic obstructive pulmonary disease, as well as to infectious diseases, injuries and other acute conditions.

“If our optimistic estimates prove true, then health care spending can be slowed substantially,” Hussey said in a statement. But they noted that many people will work to block reform. “All savings represent lost income for somebody,” they wrote.

Editing by Eric Beech

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