Dates of Project: 2007 to 2011
Field of Work: Health care financing reform
Problem Synopsis: Current health care financing, especially fee-for-service payment, tends to reward volume rather than quality and is widely recognized as a significant contributor to cost problems in the health care system. One of the proposed alternatives is "bundled payments," in which all providers involved in treating a single illness or injury episode are paid under one negotiated fee.
Synopsis of the Work: The Health Care Incentives Improvement Institute advanced the development and implementation of a bundled payment system known as Prometheus. Activities included developing case rates for bundled services, creating systems to track care and costs and determine payments to health care providers, and guiding pilot tests in three communities—Rockford, Ill.; Grand Rapids, Mich.; and Chester, Penn.
Evaluators at RAND and the Harvard School of Public Health conducted qualitative and quantitative analyses of the Prometheus pilots.
RWJF funded the project with five grants totaling about $6.5 million.
- The Institute developed 21 evidence-informed case rates for bundled services to treat acute and chronic medical conditions and surgical procedures. Among the conditions with case rates are heart attacks, hip and knee replacements, diabetes, asthma, congestive heart failure, and hypertension.
- Because most providers have relatively few patients with any given condition or disease, the wide variation in treatment costs for individual payments means that many providers could lose money under a bundled payment system.
- None of the Prometheus pilot sites had a bundled payment system in place at the end of the grant period, nor had they executed contracts between payers and providers to do so. Challenges to the sites included both the complexity of the model and the complexity of existing health care systems.