Evading Cost Containment

In its effort to contain health care costs, the Affordable Care Act includes an important initiative to test bundled payments for hospital care. Instead of separate payments to hospitals, physicians and other providers, Medicare and Medicaid will employ a single global payment that the different providers then can allocate among themselves. (Under some versions of bundled payments, there will be partial bundling of payments.)

While a promising way to reduce health care costs, we need to worry whether providers will compensate for the lower income from bundled payments by increasing the number of patients admitted to the hospital for care. Indeed, as 60 Minutes reported last night, hospitals already may overhospitalize people to pad profits.

[DO]