Bundled Medicare payment for acute and postacute care

Area of Science:

• Health economics
• Healthcare policy
• Hospital management

Background:

• Controlling postacute care costs is a key legislative policy challenge.
• Current Medicare payment systems, like the prospective payment system (PPS), may not fully align with total episode costs.

Purpose of the Study:

• To evaluate the financial risk to hospitals under a Medicare bundled payment policy for acute plus postacute care episodes.
• To assess the potential of bundled payments for cost containment.

Main Methods:

• Simulated hospital financial margins under two payment scenarios: current PPS and proposed bundled payments.
• Analysis incorporated both acute and postacute care costs.

Main Results:

• Simulations indicate that bundled payments for postacute care would not significantly increase financial risks for typical hospitals.
• Bundled payments, by encompassing multiple providers, offer a potential strength in cost containment.

Conclusions:

• Medicare bundled payment policies for acute and postacute care episodes appear financially feasible for hospitals.
• Bundled payments represent a promising strategy for Medicare cost containment in postacute care.