Posts Tagged - ‘bundled payment’

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Paradoxes of Health Insurance Plans

Wednesday, May 19th, 2010

Image: Arenamontanus under CC 3.0

If a person needs nursing care–and an at-home nurse would be equally effective and less costly than a residential nursing home–why would some health insurance plans only cover the full cost of the latter?

It seems very strange, but it happens under Medicare health insurance. Private options often follow suit, with payments to doctors and hospitals that provide negative incentives.

Proponents of reform believe that a bundled payment system (with strict quality control to avoid too much cost cutting) would reduce wasteful medical care. It would also result in more competitive price bidding, which some experts believe could save Medicare up to 8% per year–money that could be used to fund the healthcare reform legislation.

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Is Bundled Health Care In Our Future?

Thursday, May 6th, 2010

Image: borman818 under CC 3.0

One of the primary causes of rising health insurance premiums is the sheer overuse of care. The current payment system encourages doctors to order as many procedures as possible, since they get paid on an a-la-carte basis. The cost is then passed to health insurers, and therefore you.

In the near term, healthcare reform won’t change this. However, it does create pilot programs that experiment with bundled payments. Bundled health care means that physicians and hospitals are paid a near-flat fee based on treating and managing certain conditions, as opposed to being paid for each individual procedure.

Proponents of the strategy claim that it will lead to more affordable health insurance, since it provides an incentive for doctors to use preventative care more effectively.

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