'It comes to the point where you can't save': Why Rothman left bundled payments

Practice Management

In 2018, Philadelphia-based Rothman Orthopaedic Institute dropped out of Medicare bundled payments for hip and knee replacements, and the practice's experience reflects broader issues in the healthcare landscape.

For Rothman, bundled payments helped save Medicare and private insurers more than $100 million in the last five years, according to an Aug. 10 report from The Philadelphia Inquirer. But they bowed out of Medicare bundles after having to pay $6.7 million to the program.

"We bottomed out," Rothman President Alex Vaccaro, MD, PhD, told the publication. "It comes to the point where you can't save more money."

Ever since Medicare changed its benchmarking method for bundled payments, the number of physicians and hospitals participating fell to 749 in 2022 from 1,707 in 2020. 

The federal government has been proactive in trying to make the U.S. healthcare system more efficient for decades, and more than 50 experiments have been launched to reduce costs and improve quality. But according to the Centers for Medicare and Medicaid Innovation Center, only a few payment models have been successful in saving money for CMS, Rachel Werner, MD, PhD, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, told the Inquirer.

For Rothman, the practice is still expanding bundles in the private sector since those insurers offer more flexibility, Dr. Vaccaro said in the report.

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