As Obamacare shifts dollars from the fee for service sector, many Medicare supported device makers are realizing the challenges are bigger than most anticipated. Specifically, knee and hip device makers are facing hard questions on whether to raise prices or lose sales – and there are no guarantees either way.
Last week, we learned the U.S. Secretary of Health and Human Services submitted a proposal that included moving doctors and hospitals in 75 geographic areas to what it refers to as “bundled payments”. This means the hospital where surgeries occur would be “accountable for the quality and costs of the care for the entire episode of care – from the time of the surgery through 90 days after discharge.” Bundled payments are common with private insurers, including UnitedHealth Group, AETNA and Blue Cross/Blue Shield.
When payments are bundled, especially for knee and hip replacements, it’s the device makers and not the doctors who eat the profit losses. Doctors negotiate with the upper hand because they can simply choose the device maker with the lower price.
In 2013, hip and knee replacements cost Medicare more than $7 billion alone in hospital costs. Not only that, but the region of the country one lives in plays a big role in how both the procedures are done and the price tags. HHS Secretary Sylvia Burwell explains, “By focusing on episodes of care, rather than a piecemeal system, hospitals and physicians have an incentive to work together to deliver more effective and efficient care”.
While pricing is always important, families are always more interested in the health and safety of their elderly loved ones. Doctors understand this; they too simply want what’s best for their patients. Many are looking towards shared savings to meet those challenges.
These alternatives mean doctors can reap higher payments if prices go down on the devices used in the procedures. This means surgeons can still use the devices they want and benefit financially under a bundled payment arrangement even as fee-for-service medicine goes away. The bundled payment option has meant new conversations as doctors are now discussing with manufacturers ways to keep costs lower. This means better all-around care for clients.
Quality over Quantity
The government says it’s focused on “quality over quantity” and this is a better way of achieving that. “This model will incentivize providing patients with the right care the first time and finding better ways to help them recover successfully. It will reward providers and doctors for helping patients get and stay healthy. And it’s what we hear that many doctors and providers want – to be able to give the best care possible to their patients,” says Burwell.
To learn more about qualifying for Medicare and/or Medicaid, visit our website at www.zimmerlawfirm.com, or contact our offices today. We can help you and your loved one navigate the sometimes overwhelming process of these programs.
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