Rothman Orthopaedics’ decision to drop Medicare bundled payments shows why it’s so hard to slow rising health costs

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Rothman Orthopaedic was among the early adopters of Medicare’s so-called bundled payments, but now it only has them with private insurers. It shows the challenges of altering a health-care payment system that has been built on the back of Medicare.

Experts pinpointed a solution to the United States’ ever-rising health-care expenditures long ago: Hold doctors and hospitals financially accountable for cost and quality, instead of paying them more for providing more care regardless of results.Take Rothman Orthopaedic Institute: The leading Philadelphia orthopedic practice was among the early adopters of Medicare’s so-called bundled payments, an arrangement in which doctors are paid a set amount for a surgery and all services that go with it.

But the organization’s experience exemplifies the challenges of altering a health-care payment system that has been built on the back of the massive Medicare program. The University of Pennsylvania Health System experienced firsthand Medicare’s pullback. The system’s radiation oncologists were preparing for a bundled payment for the treatment of breast cancer. They reduced the number of radiation treatments for breast cancer to 17 from 22, or more than 20%.

Rothman benefits from its focus on orthopedics, which lends itself to bundled payments because there’s relatively little variation in treatment, according to Richard Snyder, an executive vice president at Independence Health Group, the largest insurer in the Philadelphia region.

 

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