Will bundled payments kill innovation?

Although bundled payments show promise as a method for containing healthcare costs while improving quality, some industry experts have expressed concern that this new payment model will hold back innovation efforts, Rebecca Paradis, a senior health policy associate at the Network for Excellence in Health Innovation (a nonprofit, nonpartisan health policy institute), writes in Health Affairs.

Bundled payment models are growing in prevalence and popularity — for instance, Medicare has launched a Bundled Payments for Care Improvement initiative. However, the focus on cost in bundled payment programs could discourage the adoption of new drugs and devices (particularly ones that are expensive in the short-term but could improve patient satisfaction long-term), as well as experimentation, according to Ms. Paradis.

"The bottom line: quality metrics are not moving as fast at the pace of bundled payments adoption and are not yet creating adequate safeguards for patient access to innovation," she writes. "Experts believe that current metrics are not robust enough to account for a broad spectrum of results, particularly in complex diseases like cancer, where bundled payments are increasingly popular."

In order to prevent bundled payments from hindering innovation, Ms. Paradis recommends the development of safeguards for experimentation, including add-on payments and carve-outs. Additionally, industry members must collect cost and clinical effectiveness information on innovations to support adoption, and there needs to be multi-sector coordination and consensus surrounding quality improvement measures that will reflect a broader range of outcomes.

"As this environment continues to develop, it will be important to have all parties — patients, providers, payers, employers and innovators — at the table to discuss strategies to accommodate innovation," she writes.

 

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