Dr Joshua Cohen Considers the Cons of Bundled Payments

Bundled payments may be part of the future in healthcare’s move to value-based care, but this payment scheme runs into the challenge of penalizing providers for factors that are beyond their control, explained Joshua T. Cohen, PhD, research associate professor of medicine at Tufts Medical Center.

Bundled payments may be part of the future in healthcare’s move to value-based care, but this payment scheme runs into the challenge of penalizing providers for factors that are beyond their control, explained Joshua T. Cohen, PhD, research associate professor of medicine at Tufts Medical Center.

What are the challenges of implementing bundled payments?

There are situations where using a bundle may be inappropriate because the factors that are influencing differences in cost among patients are things that the provider doesn’t actually control.

For example, you might have a range of patients who have different comorbidities, and some of them are very high risk, and hence would be expensive and that’s not the fault of the provider. And sometimes they are things that can be controlled by the provider. And sometimes, you can’t even tell. That’s what really makes things complicated.

For instance, if you take COPD patients, it turns out that patients who are higher income have a lower risk of being readmitted to the hospital after 30 days. So you could say, ‘Alright we should give a break to the provider. They’re caring for patients who are lower income.’ The problem with that is that we don’t know what factor it is that is causing these patients to be readmitted to the hospital with a higher probability. It could be more comorbidities, in which case that’s not the fault of the provider, or it could be that historically they don’t get as good care.

If we reward providers with higher pay for patients who have been readmitted more because they haven’t been getting good care, well that’s rewarding providers for providing poor care. So that’s not a good idea.

So when you don’t know what the cause is of the differences among patients in terms of their care expenses, that complicates matters a lot. And then looking further down the road, say we’re going to reimburse providers and we want to create a bundle for weight control. Well there it’s really obvious that there are matters outside of the control of the provider since the greatest predictor of whether a lifestyle change or a diet is going to work is the adherence by the patient. It’s not the different type of diet that’s prescribed. So the success there is definitely out of the control of the provider—it’s probably not a good candidate for a bundled payment.

How can bundled payments be adjusted to take into account factors that are outside of the providers’ control?

If you’re going to try to take into account the things that are outside of the control of the provider, that’s a good thing to do and you can create statistical models that will tell you how much different factors that are outside of the control of the provider influence the cost of care.

But there are a couple of problems there. One, you have to be able to measure them. And 2, even if you can measure all of them, sometimes there’s a lot of variation that is still not accounted for in the statistical model—sometimes well under half.

So you’re left with an unknowable outcome.

In a recent debate, you and other experts discussed whether or not drug prices are too high. Why is this such a tough question to answer?

It is, in part, the pharmaceutical industry’s story that it costs a lot of money to create these pharmaceuticals, number 1, and, number 2, that they deliver fantastic value and therefore society should be willing to pay for those medications just as we pay for very expensive life-saving surgeries.

That’s a really good set of points, but I think that in order to get across to a more general audience, an audience that is not well steeped in health economics, I think that a lot of work has to be done to understand what it is that are people having a hard time with: emotionally and so on and so forth.

One thing we observed when we had a debate on this issue was that people think of pills as something that is very inexpensive. I mean I can go to the corner pharmacy and I can get aspirin for 10 cents. So, yeah, I understand some pills are going to be more than that. But $1000 a day? That’s very counterintuitive for many people to understand. So in order to overcome that issue or at least convey the story from the point of view of the pharmaceutical industry, in addition to telling it from their perspective, I think that the pharmaceutical industry really has to wrestle with the notions people are going to have from their everyday experiences.