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Bundling may leave hospitalists vulnerable, says new Phoenix Group white paper

Hospitalist Leadership Connection, September 8, 2009

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The Phoenix Group, a hospitalist think tank, last week released a white paper, “Hospitalists Assess the Impact of Bundled Fees.” The white paper calls the proposed payment restructuring in the form of bundling fees the “cataclysmic uprooting of the traditional fee-for-service payment system.”

The Centers for Medicare & Medicaid Services (CMS) has implemented the Acute Care Episode (ACE) demonstration project in five cities across the country. Participating hospitals receive bundled payments that are then shared between the hospital and the physicians practicing there. Payments include inpatient acute and post-acute care.

Although the Society of Medicine at its annual 2009 meeting declared that it has no official stance on bundling, The Phoenix Group has been vocal in assessing the effects of bundling.

“The plan that finally emerges, perhaps by the end of this year, holds the potential to leave hospital medicine in a position of vulnerability, particularly with respect to the security and reliability of compensation,” according to the white paper. “No longer would even a portion of a hospitalist’s revenues remain free of control by the hospital.”

The key points of the white paper include the following:

• The patient-centered medical home (PCMH), also currently in its experimental phase, would increase primary care compensation and therefore attract more people to the specialty. PCMHs may or may not reduce compensation to other providers, such as hospitalists.
• Bundling fees will not likely lower hospital admission rates, and there is little evidence that it will
• Many hospitals will lack the experience to manage bundled payments
• Hospitalists should voice their opinions about the proposed bundling system

The Phoenix Group makes the following recommendations:

• Look for ways that the fee-for-service payment system can be more DRG-specific to increase physician-hospital alignment
• Payment systems should go through CMS instead of a hospital or third-party
• Evaluate the ACE project through an evidence-based approach before making legislative decisions
• Include post-acute care to the current and any future ACE sites

After convening in March 2009 in Dallas, the group’s fifth meeting resulted in this white paper. The Phoenix Group represents more than 3,000 members, particularly private practice hospitalists.

The Phoenix Group anticipates that Congress will pass a major reform bill by the end of the year and that the bundling program will launch in 2014.

You can read more about bundled payments in the upcoming October issue of Hospitalist Leadership Advisor, supplement to Medical Staff Briefing. Join in on the conversation on the HospitalistLeadership.com blog.

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