Health affairs
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Payers are considering bundled payments for inpatient surgery, combining provider reimbursements into a single payment for the entire episode. We found that current Medicare episode payments for certain inpatient procedures varied by 49-130 percent across hospitals sorted into five payment groups. Intentional differences in payments attributable to such factors as geography or illness severity explained much of this variation. ⋯ Postdischarge care accounted for a large proportion of the variation in payments, as did discretionary physician services, which may be driven in turn by variations in surgeons' practice styles. Our study suggests that bundled payments could yield sizable savings for payers, although the effect on individual institutions will vary because hospitals that were relatively expensive for one procedure were often relatively inexpensive for others. More broadly, our data suggest that many hospitals have considerable room to improve their cost efficiency for inpatient surgery and should look for patterns of excess utilization, particularly among surgical specialties, other inpatient specialist consultations, and various types of postdischarge care.
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Fee-for-service payment is blamed for many of the problems observed in the US health care system. One of the leading alternative payment models proposed in the Affordable Care Act of 2010 is bundled payment, which provides payment for all of the care a patient needs over the course of a defined clinical episode, instead of paying for each discrete service. ⋯ The pilots have taken longer to set up than expected, primarily because of the complexity of the payment model and the fact that it builds on the existing fee-for-service payment system and other complexities of health care. Participants continue to see promise and value in the bundled payment model, but the pilot results suggest that the desired benefits of this and other payment reforms may take time and considerable effort to materialize.
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Many policy analysts fear that eliminating the individual health insurance mandate and penalty from the Affordable Care Act of 2010 would lead to a "premium spiral," in which healthy people would drop coverage, premiums would soar, and the number of people with coverage would plummet. However, there are other provisions of the law that would greatly mitigate this effect. ⋯ In sum, the Affordable Care Act would still cover 23 million people who would have been uninsured without the law. Our study suggests that although the mandate would have important effects on premiums and coverage, it might not be essential to the act's successful implementation.
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The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act's intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs' patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators. Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation. It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.