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Evidence-based medical payment system model challenging to implement: RAND


WASHINGTON—A bundled health care payment model promoted by a group of employers, insurers and health care economics and policy experts is proving to be harder to implement in practice than had been envisioned in theory, according to researchers at RAND Corp.

After three years of piloting the model in three markets, claims services provider Prometheus Payment Inc. has yet to achieve its goal of paying health care providers “evidence-based case rates,” or bundled payments based on what it costs to deliver only the care that medical science has proven to be appropriate for specified conditions.

This differs from traditional fee-for-service payments, which critics say encourage high volumes of service, and capitation, which can induce providers to limit access to care.

However, researchers found that the effort had prompted significant changes in the way participating providers practice medicine. In particular, it made providers aware of their ability to change health care delivery to reduce costs and improve quality.

“The struggles of the Prometheus participants are likely to help others adopt bundled payments more quickly in the future,” said Peter Hussey, the study's lead author and a policy researcher at RAND, in a statement.

Interest in bundled payments as a way to control health care spending has grown since passage of the Patient Protection and Affordable Care Act, which encourages the approach. In fact, federal officials announced a voluntary national Medicare bundled payment initiative in August.

“There is a tremendous amount of interest in this type of payment reform,” Mr. Hussey acknowledged in the statement. “But we found that transferring it into practice is extremely difficult. The model is very complex, and the face that it builds upon the existing fee-for-service payment system presents challenges.

Washington-based Prometheus was launched in 2006, two years after a team of experts in health care economics, law, policy, health plan operations and performance measurement had developed the strategy. The group, which also includes several employer health care coalitions, is being led by Francois de Brantes, national coordinator for the Washington-based Bridges to Excellence, an employer-spearheaded pay-for-performance initiative.

The RAND study evaluated the progress made during the first three years of Prometheus Payment's pilot programs involving Crozer Keystone Health System-Independence Blue Cross in Pennsylvania; Employers' Coalition on Health in Rockford, Ill.; and Priority Health-Spectrum Health in Michigan. RAND researchers collected information from participating groups from 2009 to 2011, both through telephone interviews and by visiting each of the three pilot sites.

“This was a limited study based on only three of the numerous pilots going across the country on bundled payments. Since this paper was written, significant progress has been made in those sites, which were the first and therefore the most difficult pilots. The ones that have come since, which RAND did not study or report on, are all up and running,” said Mr. de Brantes in an emailed statement. He said successful statewide implementations of Prometheus Payment are under way with Blue Cross and Blue Shield of North Carolina and Horizon Health Care Innovation in New Jersey.

The findings of the RAND study are published in the November edition of the journal Health Affairs.