With surprisingly disparate changes in health care spending revealed in a recent analysis by UMass Medical School researchers, policy makers charged with bringing health care spending under control with so-called “bundled payments” have a tall order on their hands.
An analysis of health insurance claims undertaken by Allison Rosen, MD, MPH, ScD, associate professor of quantitative health sciences, and colleagues illustrates the complexity of transitioning medical payments to bundled payments, in which providers receive a single fee for all of the care associated with a specific condition or illness. Not only is it difficult to determine the baseline for these bundled payments, no one knows how payments would be adjusted over time to reflect changes in the cost of care. In a health care marketplace where increases measured in fractions of a percent represent billions of dollars over time, understanding what happens when rates change is critical to understanding health care costs.
Published in this month’s Health Affairs, the study looked at how bundled payment rates might be adjusted over time to reflect changes in the cost of delivering care. They tested the thesis that uniform update rates would be fair and accurate if costs increased at a uniform rate across all diagnoses or medical conditions—but an analysis they performed of commercial claims shows that this isn’t even remotely the case. Between 2003 and 2007, spending growth was highly skewed: 10 percent of diagnoses accounted for 82.5 percent of spending growth, and spending growth ranged from a decline of 75 percent to an increase of 323 percent. Dr. Rosen and colleagues conclude that policy makers will have to look at ways to address variations in spending growth, such as updating such global payments one by one, at least at the outset. And with hundreds of illnesses and conditions, that’s a monumental undertaking.
Rosen’s research focuses on how best to measure and improve the value of health care spending. She has a particular interest in the feasibility and effectiveness of tailoring payment policies to ensure that health is maximized—instead of compromised—by policy efforts to contain costs.