Bundled payments for Medicare patients is one of the big changes that comes with the Affordable Health Care Act, also known as Obamacare. The loss of revenue will be obvious for practitioners.

ObamacareObamacare places restraints on payments made for Medicare patients, cutting them by up to 20 percent, and bundles payments for treatments and procedures that were billed separately in the past.

Bundling For Savings

Approximately one-fifth of the funding for Obamacare comes from slashes to Medicare reimbursements to medical providers.

Obamacare removes the traditional fee-for-service payment model, replacing it with a bundled system for inpatient hospital services and post-discharge treatment, also known as episode-based payment.

The new system’s intended goal is to reduce the length of hospital stays and readmissions. When an individual is hospitalized, they will be treated by a team of healthcare professionals for a specific length of time.

The team can include medical professionals from multiple care facilities. The grand experiment in healthcare delivery to patients began in Jan 2013 and will operate for three years.

The members of a treatment team will be rewarded with financial incentives for getting Medicare patients cured/recovered quickly.

Unfortunately, the system opens the door to the potential of reduced quality of care and a temptation to cut corners.

Payments are fixed at a set amount. The fewer resources used on patients, the more money goes to the hospital.

Hospital At Home

As part of the Medicare imperative to cut costs, the Independence at Home initiative began in Jan. 2012. The program evaluates the profitability and outcomes of home monitoring technology to discover if costs are reduced and care improved.

The Medicare-related programs are based on a 2008 essay by President Obama’s healthcare advisor, Dr. Ezekiel Emanuel.

The doctor postulates that the rise in healthcare costs can be traced to patients who “overuse” the healthcare system. He advocates for the removal of “fluffy, self-indulgent excess” out of the system and giving doctors financial incentives to deliver less care to patients. Emanuel’s views may come to fruition with the Independent Payment Advisory Board (IPAB).

The IPAB Ingredient

Obamacare established the IPAB, whose sole function is to find more ways to reduce healthcare spending, specifically in the Medicare arena. The 15-member panel isn’t elected and can’t be replaced by the will of the people.

IPAD could mean radical cuts in the future for Medicare patients.

ObamacareThe panel will be responsible for evaluating available treatment options and deciding which treatments and procedures provide the best value for the money spent.

Their recommendations automatically become law unless Congress counteracts them with a three-fifths super majority vote. IPAB’s recommendations start in 2015 and will be implemented in 2018.

There’s no guarantee that bundling payments for care delivered to Medicare patients will improve quality of care or reduce costs.

To retain more of the fixed fees allotted for hospital care, Medicare patients could lose access to tests, treatments and medications that are considered too costly, while IPAB recommendations will hold more such cuts in the future.