How Bundled Healthcare Works?
Patients in the United States face varying degree of costs for the same healthcare service. For instance, the cost of a cardiac operation could vary in the same city by as much as 40% depending on the service provider that has been selected. This has led the industry players to look for models which are more cost-effective and where service providers can be held accountable. This is how bundled healthcare payment programs have come into existence. It is only a new way of reimbursing service providers. However, it seems to be revolutionary. Companies like Lowes, Wal-Mart and Boeing have already adopted the bundled payment model and other companies are also catching on quickly. In this article, we will have a closer look at what bundled payments are and what are the pros and cons of adopting this model.
What Are Bundled Payments?
Under the traditional model, the insurer had to reimburse several service providers. For instance, for every claim, the insurer had to pay the doctors, the pathology lab, and the hospital and so on. However, under the bundled payments model, the insurance company will make a fixed payment to a single party. For instance, if the patient wants to get a knee replacement done, the insurer will pay a fixed amount to one party. That party will then be responsible for arranging other stakeholders like doctors, nurses etc. The insurer will pay a fixed amount (lets say $100 per surgery). If the third party is able to ensure that the patient is provided all the services within $80, they get to keep the balance $20. However, if there is an upward revision of costs to $130, then they have to shell out the $30 balance. The whole idea behind bundled payments is to create a culture of standardized healthcare. This means that within the same city or zip code, the cost of providing the same medical service should not vary widely.
Bundled payments are proving to be cost-effective. This is the reason that corporations are quickly adopting this model. Since this method is cost-effective, the premiums are also low which helps mega corporations save millions of dollars without reducing the standard of healthcare which they provide to their employees.
Challenges Faced By Bundled Payments
To sum it up, bundled payments model is still a promising idea. However, a lot of work still needs to be done. For instance, many drugs and services tend to be expensive or variable. They must be categorically excluded from the contracts to ensure economic viability. Also, the system needs to adapt to constant feedback. Advances in medical technology create the possibility of providing better services even more cheaply. Insurance firms will need to be on top of their data to ensure that they detect such patterns early and adjust their payouts accordingly.
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