The Bundled payment is defined as the reimbursement of health care providers on the basis of expected costs for clinically defined episodes of care. It has been considered as a middle ground between fee for service reimbursement and capitation system. Bundled payment has been proposed in health care reforms in the United States as a strategy for reducing health care costs, especially during the Obama administration (Mechanic & Altman 2009). While federal and state health care laws make bundled payments difficult to structure and implement, both the Medicare program and commercial payers have embraced bundled payments as a means for reducing costs, and many providers view bundled payments as an effective market strategy and a gateway to population management and more complex value-based payment arrangements (Moeller & Evans 2010).
If one tries to design and implement a bundled payment system with commercial payers, he or she would immediately find that there exist complex legal issues of Fraud and Abuse to consider. This is mainly because the applicable laws were not designed to such types of systems. Although it may require a significant amount of time and effort to set up a compliant bundled payment system, I believe that it is possible to create such systems, and eventually, to overcome legal challenges for Fraud and Abuse. This paper hypothesizes that in designing commercial bundled payment system, increased utilization of applicable exceptions of related laws can reduce the potential legal risk of Fraud and Abuse.
Fraud and Abuse consideration
Confusion over the legal and regulatory requirements surrounding the creation of a bundled payment and shared savings arrangement is one of the primary roadblocks to widespread commercial use of these models. There are multiple federal and state fraud and abuse laws and regulations that must be considered when designing a commercial bundled payment plan.
It is important to note that federal fraud and abuse laws and regulations only apply to programs providing care to federal health care payment program beneficiaries. Thus it may seem unnecessary to comply with these regulations, given that commercial bundled payments by definition do not include the federal government as a payer and therefore, theoretically, do not have an impact on federal program beneficiaries. However these legal constraints can be applicable to commercial bundled payment programs.
For instance, certain incentives paid to physicians by hospitals for cost savings under BPCI program, may not be appropriate in a commercial payer bundled payment program to the extent any of the beneficiaries have Medicare or Medicaid fee for service coverage. Moreover, physicians’ behavior will be influenced by appropriate financial incentives in a commercial payer context, but such care decisions will impact care to Medicare and Medicaid beneficiaries who are also being treated by that physician outside the context of the bundle. In a...