HCI3 Update from the Field: RAND’s Assertions Prove Difficult to Realize

Submitted by francois.debrantes@hci3.org on Friday, November 11, 2011 - 11:31

Newtown, CT – November 11, 2011

It's really pathetic when a reputable research organization sacrifices the integrity of their work for the sake of a few cheap headlines – And yet that's what RAND did this week. They issued a press release with this title: Bundling Payments To Curb Health Care Costs Proves Difficult To Realize. Now, I don't know about you, but to the casual and not so casual reader, that headline implies that bundling payment to contain health care costs doesn't work. And, in fact, that's the erroneous conclusion drawn by many in the trades based on two papers in this month's Health Affairs. In the first,  Miller and colleagues examine the variation in episode costs for selected surgeries in the Medicare population and conclude that despite the DRG payment system, there is considerable variation in costs of care when one includes professional services and post-acute care. This finding is certainly consistent with our own published work. While the DRG payment system has been effective, its time has come and gone. It's simply ineffective at controlling the total costs of an episode, and the heterogeneity of conditions and procedures lumped into DRGs makes it nigh impossible to convert it to something more useful. In the second, RAND's Hussey, and his colleagues present a 6 to 12 month old snapshot of the original PROMETHEUS pilot sites (and only those). In it they describe the technical and human barriers that had to be brought down, painstakingly, in each site, to get to lift off. Of course that snapshot is only a rear-view mirror, a look into the past, not the present or the future, and limited to three of several sites. Both these papers show us the opportunity in front of us, despite the challenges. Today, in response to some of these challenges, and in looking ahead, we release a new report, aptly titled: That was then, this is now.
What this means to you –
RAND's deceitful and dishonest headline is shameful, and we all need to call them out for taking the low road. There's nothing in their paper that even closely infers that Bundled Payments don't work. They pulled a media stunt and, like many stunts, this one has collateral damage for all those who have worked tirelessly to make these pilots work. The truth is that the evidence supporting bundled payments is overwhelming and it's one of the reasons why the CMMI launched its Bundled Payment pilot. And while the technical barriers, including automated accounting systems sitting on claims adjudication systems, have slowed past efforts, they, like other barriers, have been broken down. Contrarily to the limited year-old snapshot reported by RAND, today's snapshot shows a very different and more telling picture. Plans like Priority Health are hooked up to these automated systems and are receiving reports on episodes triggered, and actual dollars spent. New technologies are coming on line to expand the offering and empower providers and payers to embark on value-based payment. More technologies will be spurred by the demand. And there is demand, make no mistake about it. Why? Because the evidence of cost savings is so overwhelming. That has been the distance traveled. Today, statewide implementations of Bundled Payments like the ones in NC and CA are operational, complete with provider contracts and bundled payments made. Don't get fooled by the lying headlines. What matters is what's going on today in the field, and will continue tomorrow.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org