If all goes well, Arkansas is about to save a bundle of money in its giant Medicaid program, and many of the 770,000 Arkansans who patronize it will get better medical treatment, too. As we said, if all goes well. . .
A few ideas that sound good do not function well in application, but Gov. Beebe nevertheless deserves credit for trying it. It is called “bundled care,” and it is among the many little-known features of the much-maligned Patient Protection and Affordable Care Act of 2010, more derisively known as “Obamacare.”
Congress could not bring itself to mandate some of the ideas for controlling the mushrooming cost of health care in America because of opposition from insurers or medical-provider groups, so it tossed a number of them out as pilot projects. States or other entities if they liked can experiment with the concepts, and if they work, the rest of the health-insurance system, including Medicare, Medicaid, veterans insurance and commercial networks, might embrace them at some future date. If they don’t work, they can be tossed aside with negligible harm.
Bundled care was an option for states to take in funding their Medicaid hospitalization and physician-care programs for indigents and children. Like every other state, Arkansas is struggling to pay for its Medicaid services, although the federal government pays nearly 78 percent of the costs, one of the highest shares in the country. Tidy payments from federal stimulus funds have kept the state’s Medicaid program shored up, but now that the stimulus funds are exhausted, the state faces the prospect of either raising more money for Medicaid (read “taxes”) or making serious cuts in benefits or reimbursement. When his Medicaid director suggested taking Washington up on the Affordable Care Act deal last year, Beebe jumped at it—that is, after a thoughtful spell.
Monday, Beebe said he has no guarantee that bundled care will work—that is, save money and improve treatment—“but you have to try.”
Now, when a patient gets a heart bypass, gallbladder surgery or whatever, all the providers—surgeons, anesthesiologists, other specialists, the hospital and therapists—separately bill the patient and his insurers. Under bundled care, the insurer—in this case Medicaid and its administrator—will pay a single sum for the whole episode of treatment. The payment will be distributed among the providers. It also requires collaboration on the treatment, including aftercare. The idea is that the patient and third-party payer will obtain economies of scale and the patient will be assured coordinated treatment. All the providers will avoid needless procedures and expenses and the prospect of a relapse because their own incomes depend upon it.
It is not exactly a stab in the dark. Some of the leading health-care institutions in the country have implemented bundled care in small doses with good results. A Medicare bundled-payment demonstration project for heart-bypass surgeries saved about $42.3 million, about 10 percent of the expected costs, and patients saved $7.9 million in coinsurance. The coordinated aftercare saved returns to the hospital and lowered the mortality rate.
President Obama’s Department of Health and Human Services decided that the concept was so promising that it is now pushing the idea to be tried on a bigger scale than in the few brave states like Arkansas that are experimenting with it on a limited scale with their Medicaid programs.
Revamping the payment system will not be without controversy or resistance, particularly among specialty providers of care. It may mean reduced income, and many doctors already refuse Medicaid patients owing to Medicaid’s lower reimbursement rates. The Beebe administration has hired the giant global business consulting firm of McKinsey and Co. to design the payment system. It will get $3 million for the job. If they do it well, it will be worth the money. If it does not function well, Beebe will hear a lot more about it. For now, he gets good marks for trying.
