Health Care Payment Reform: Bundling Payments to Fight Rising Health Care Costs

Abstract

I used Health Care Utilization Program (HCUP) data along with a PROMETHEUS calculation provided by the Health Care Incentives Improvement Institute (HCI), to predict the cost difference of specific acute care episodes in a fee‐for service system versus a bundled payment system called PROMETHEUS. This analysis includes only certain specific types of acute episodes of care which account for 30% of the national healthcare expenses. For the values in 2010 through 2012, a polynomial trend line was plotted to find the projected value in these years. This research and analysis calculates savings from 1997 through 2015 will equal a total of $376.32 billion, if a PROMETHEUS Payment system had been implemented. This research also indicates that utilizing a PROMETHEUS Payment Model could potentially increase the quality of health care. The PROMETHEUS model focuses on driving down the costs of services by limiting the need for patient readmissions. The PROMETHEUS Model allows a set amount for Potentially Avoidable Costs (PAC) and the PAC’s incentivize hospitals and doctors to prevent avoidable costs in order to collect the PAC stipend as a bonus. By minimizing patient readmission and reducing avoidable complications, health care quality could be improved.