Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration

VOL. 33| NO. 8August 2014Variety Issue

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1. Alert me to new issues of Health Affairs

• From The Editor-In-Chief
• Entry Point: New Success Metrics
• Safety-Net Hospitals And ACA Payments
• Obstetric Complication Rates
• Bundled Payments Fail In California
• Premiums' Impact On CHIP Enrollment
• US Black-White Life Expectancy Gap
• Diabetic Amputations By Income
• Showing MRI Prices Caused Competition
• Health Spending Growth And Recession
• US Behavioral Health Care Data
• PDUFA And Black Box Warnings
• US Tobacco Users And Health Coverage

Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration

1. M. Susan Ridgely1,*, 
2. David de Vries2, 
3. Kevin J. Bozic3 and
4. Peter S. Hussey4

+Author Affiliations

1. ¹M. Susan Ridgely (ridgely@rand.org) is senior policy analyst at the RAND Corporation in Santa Monica, California.
2. ²David de Vries is a research assistant at the RAND Corporation in Santa Monica.
3. ³Kevin J. Bozic is the William R. Murray M.D. Endowed Chair in Orthopaedic Surgery and a professor in and vice chair of the Department of Orthopaedic Surgery, University of California, San Francisco.
4. ⁴Peter S. Hussey is senior policy researcher at the RAND Corporation in Boston, Massachusetts.

1. ↵*Corresponding author

Abstract

To determine whether bundled payment could be an effective payment model for California, the Integrated Healthcare Association convened a group of stakeholders (health plans, hospitals, ambulatory surgery centers, physician organizations, and vendors) to develop, through a consensus process, the methods and means of implementing bundled payment. In spite of a high level of enthusiasm and effort, the pilot did not succeed in its goal to implement bundled payment for orthopedic procedures across multiple payers and hospital-physician partners. An evaluation of the pilot documented a number of barriers, such as administrative burden, state regulatory uncertainty, and disagreements about bundle definition and assumption of risk. Ultimately, few contracts were signed, which resulted in insufficient volume to test hypotheses about the impact of bundled payment on quality and costs. Although bundled payment failed to gain a foothold in California, the evaluation provides lessons for future bundled payment initiatives.

• Organization and Delivery of Care
 
• Physician Payment
 
• Health Reform