Including Physicians in Bundled Hospital Care Payments

Time to Revisit an Old Idea?

Published in: JAMA, The Journal of the American Medical Association, v. 313, no. 19, May 2015, p. 1907-1908

Posted on RAND.org on April 21, 2015

by Ateev Mehrotra, Peter S. Hussey

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Medicare uses the prospective payment system to pay a hospital a fixed amount of money for a hospitalization: the Diagnosis Related Group (DRG) payment. The DRG payment covers all hospital-related expenses, except for physician services. Most private health plans mimic this fragmented payment method. Given new payment models and the changing relationship between physicians and hospitals, it is time to reconsider bundling physicians into hospital payments. This commentary outlines the potential benefits of this payment change and discusses key implementation barriers.

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