AJMC reports that Humana has designed a new bundled payment model for maternity care. Initially, 5 practices will participate in a pilot study. While some claimed that bundled payment will improve quality and reduce cost (see “Bundle of Joy“), do we expect this to happen in practice?
The key question is, what one means in terms of quality. It could be the case that quality could be improved by reducing the number of Cesarean deliveries. According to the CDC, 31.9% of deliveries in the U.S. are made via Cesarean. Cesareans are clearly beneficial for many patients; perhaps even the average patient. For the “marginal” patient (where marginal is defined in economic terms) this surgery is likely to have little or even negative health benefits. For these cases, the bundled payments are likely to reduce cost and improve quality. If the medical technology does not change, then providers have an incentive to identify ways to reduce cost while maintaining quality. Providers would still have an incentive to maintain quality due to either reputational effects or perhaps direct payments based on quality of care from providers.
On the other hand, if there is significant innovation, bundled payments often lead to rationing care. For instance, consider a new treatment for a rare pregnancy-related condition. Under a fee-for-service system, payers can reimburse providers for these more complicated cases. Under bundled payments, however, providers that provide more effective, but also more expensive treatments are financially penalized. Thus, physicians must determine whether to do what is best for the patient (i.e., use the innovative treatment) or what is best for the bottom line (limit access to innovative treatments). Alternatively, providers may seek to identify low risk (i.e., profitable) pregnancy cases and have the more complex (i.e., less profitable) cases sent to other providers
One may think that for maternity care, with all the Cesareans, we are more likely to currently be in an equilibrium of over-use of medical services. While the implementation of bundled payments can address that issue, one must insure that any bundles are implemented in a way that when innovative treatments that provide high value to patients come on the market, these patients are still provided access to the treatments they need, and quality of care does not suffer.