Health care pricer: Bundle it

The Obama administration’s interpretation of a major component of the Patient Protection and Affordable Care Act (PPACA), a premium subsidy provision, has just survived a Supreme Court review.

The Centers for Medicare & Medicaid Services (CMS) have released preliminary data suggesting that another major PPACA component, a reinsurance program, will be able to meet its obligations.

But PPACA critics continue to press another point: That, however relatively stable health care costs have been over the past few years, they are still increasing faster than the overall inflation rate, and PPACA does not seem to be all that well suited to increasing patients’ and insurers’ control over the cost of care.

See also: How Obama’s plan to control health care costs could fail

Elaine Daniels, a network strategy executive at Aver Informatics Inc., is helping to create what she believes will be a big component of the next phase of health system change efforts: putting the payments for related groups of medical services in “prospective payment bundle arrangements.”

Customers of auto mechanics would prefer to pay one well-negotiated bill to “get a carburetor replaced” than to pay itemized, and inflated, fees for all of the separate parts and services that go into replacing a carburetor.

Daniels, who previously was a contract consultant at Blue Cross and Blue Shield of North Carolina, thinks well-thought-out bundling can be as helpful in the health care market as in the auto repair market.

Daniels said agents and brokers in the group market should like talking to her company. ”We can make their lives easier,” she said.

Employers’ experience varies, but many employers can save about 10 percent to 30 percent on many groups of bundled procedures, simply by bundling, Daniels explained.

She said one large employer in North Carolina was able to save $6 million simply by bundling knee and hip replacement surgery. ”The savings are mind-boggling,” she said.