Package pricing: Geisinger's new model holds the promise of aligning payment with optimal care

June 1, 2008

Geisinger Health System and Geisinger Health Plan have attracted attention from key industry players ever since introducing a bundled-pricing program called ProvenCare in 2006. Richard Gilfillan, MD, president and CEO of Geisinger Health Plan, played a critical role in the launch of the new payment structure.

Current healthcare pricing "cannot be understood by a human being with average intelligence or limited patience," according to Leavitt. He believes the industry must overcome the notion that healthcare pricing should be different than other goods and services.

In fact, the Medicare Payment Advisory Commission is evaluating how Medicare might pay providers single prices for episodes of care and is urging Congress to enact legislation as such. Routine surgery prices, for example, might bundle the cost of the surgery, the hospital stay, the anesthesiologist and other related therapy into one price. And providers could bid competitively for Medicare's business.

"We had two teams, a clinical team and an insurance team," Dr. Gilfillan says. "My role was to think through the implications of this from the reimbursement side and help our folks structure the analysis that led to determining the appropriate global rate for pricing."