Healthcare News & Insights

Hospitals explore bundled care: Does one price fit all?

With accountable care organizations (ACOs) being all the rage these days under the Affordable Care Act, some hospitals are partnering with insurers in some innovative ways to promote pricing transparency with patient care.

167248933One that’s becoming more popular is a “one price, one bill” bundled care model being promoted through certain partnerships.

In these arrangements, hospitals and insurance carriers set one fixed price for an entire procedure as a single episode of care. The price includes follow-up care and appointments, and the patient receives all charges on one bill.

The bundled care model has been most commonly used with organ transplants, but it’s now being explored as an option for other procedures.

The Centers for Medicare & Medicaid Services (CMS) first began working with ACOs to offer bundled payments earlier this year, and recently, other private insurers have gotten on the bandwagon, collaborating with hospitals and doctors across the country to provide fixed-cost treatment for a variety of conditions and ailments, from diabetes to knee surgery.

According to an article in the Minnesota Star Tribune, Twin City Orthopedics is offering knee replacements for patients for a flat fee of $21,000. The price includes the surgery, medication and all required physical therapy appointments. And UnitedHealthcare, a Minnesota-based insurer, is participating in a pilot program to provide bundled pricing for cancer treatment.

These initiatives are touted as a way to curb costs in the healthcare industry. Across the board, hospitals are charging drastically different prices to perform the same procedure. Pricing is affected by a number of factors – not all of them easily understood. A one-price model puts everyone on the same playing field, allowing better control of costs.

Direct approach with businesses

Some providers are even bypassing the insurance companies and making direct arrangements with large companies to provide health care for their employees. Cutting out the middle man can lead to even bigger savings – as well as better care for patients.

One example: The national retail giant Wal-Mart recently collaborated directly with six hospitals, including the Mayo Clinic, to cover certain cardiac and spine procedures at no additional cost to employees enrolled in its healthcare plan.

Because of benefits like these, patients seem to be on board with bundled care pricing. In a recent survey discussed in Healthcare Finance News, 78% said the idea appealed to them. Those who shoulder more of the burden for their healthcare costs favored it the most.

Bundled care and your hospital

Though there’s still debate about how to best implement bundled care (or even if it should be implemented at all), it’s worth exploring your options now before it becomes another federal mandate.

Keep one thing in mind: For a bundled care model to work effectively, hospitals must work closely with payors (or businesses) to establish a price that provides fair compensation for the care being administered.

Would your hospital ever consider a “one-price-fits-all” approach by collaborating with insurers or businesses to offer fixed pricing for procedures? Let us know your thoughts in the comments.

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