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Bundled payments: Retrospective vs. prospective

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Roman representation of  their god Janus, who looks forward and back.

François de Brantes and Suzanne Delbanco discuss in Health Affairs whether the debate over retrospective vs. prospective bundled payments is an unneeded distraction.  Among their observations:

“Some believe that the holy grail of bundled payments is prospective bundles—setting a price for a course of care that has not yet occurred and paying only that amount at the start of the episode of care. The thinking behind prospective payment is that the incentives for cost containment will be stronger because providers will be loath to overspend when they know there’s no chance of additional payment. They also sound administratively simpler for the payer—just cut one check, and don’t worry about figuring out who did what. …

“However, prospective bundled payments can be difficult to implement because they require deciding which provider receives the funds and can be trusted to distribute them properly among all providers involved in an episode. Legal and turf issues can stymie the effort.

“The difference between retrospective and prospective payments is not significant enough to delay implementation of bundled payment in the hopes of perfecting prospective bundling. Payers shouldn’t go into a retrospective bundled payment arrangement without having agreed upon a budget for a procedure or other episode of care in advance, even though they may settle debts and credits on the back end. In addition, providers, like most people, have an aversion to loss, and if the payment arrangement includes downside risk, they will work hard to avoid any losses. This means that waiting for the means to implement prospective bundles on a broad scale is not sufficient cause for delaying the use of bundled payment.”

To read the Health Affairs piece, please hit this link.

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