Bundling Gains Momentum, Even as New Study Raises Questions


Health care cost bundling—the aggregating of all the costs of an episode of medical care into a single bill—seems to be here to stay. After all, it’s the way most all other billing is done. When your car is serviced, you don’t get a separate bill from each mechanic and vendor of parts and fluids. And you certainly don’t get a bill for the facility fee. The same goes for airplane travel.

For Medicare, the journey toward bundling really got under way with the Bundled Payments for Care Improvement in the Affordable Care Act. As of the first day in 2103, 243 providers began participating in the program, each choosing from among 48 episodes of care and from four alternative bundling models. If a participant achieves Medicare’s targeted cost savings, it shares in the savings.

Then last Thursday CMS announced plans to nearly triple the number of hospitals and medical groups in the program—adding 4,100 providers to 2,400 already testing the waters.

But at the same time CMS was announcing the expansion, the RAND Corporation released a study branding as a failure a bundling experiment in California. The finding corresponded with RAND’s conclusion in an earlier study of a bundling program in three California communities. In the most recent program two of the original six health plans dropped out, as did six of eight hospitals.

The new study attributed the dismal outcome to four factors: reaching consensus on bundle definitions consumed too much time; insurers expected price reductions, but hospitals feared them; inadequate claims-processing infrastructure; and delays and uncertainty about state regulation (it was California, after all).

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