Ty­ing it to­gether

Bundling projects pro­ceed, with some snags

Modern Healthcare - - Strictly Finance -

Bundling pay­ments to hos­pi­tals and doc­tors for episodes of care is gain­ing mo­men­tum in the fed­eral govern­ment and in the pri­vate sec­tor as a way to in­crease provider ac­count­abil­ity and im­prove care—but lin­ger­ing chal­lenges may de­ter its ap­pli­ca­tion on a broader scale.

To help ad­dress ris­ing health­care costs, in­clud­ing the grow­ing tab for med­i­cal com­pli­ca­tions and read­mis­sions, Geisinger Health Sys­tem, Danville, Pa., came up with a plan in 2006 to pack­age or “bun­dle” pay­ments for elec­tive car­diac sur­gi­cal care or coro­nary artery by­pass grafts. The re­sult: im­proved out­comes and re­duced costs, its ad­vo­cates claim.

Since it started bundling pay­ments for car­diac surgery, three-hos­pi­tal Geisinger re­ports that all of its pa­tients are re­ceiv­ing “best care,” based on 40 best-prac­tice steps de­rived from the Amer­i­can Heart As­so­ci­a­tion and the Amer­i­can Col­lege of Car­di­ol­ogy guide­lines for car­diac surgery.

As a payer there’s an un­pre­dictabil­ity of how much some­thing is go­ing to cost, says Al­fred Casale, as­so­ci­ate chief med­i­cal of­fi­cer and chair­man of cardiothoracic surgery at 172-bed Geisinger Wy­oming Val­ley Med­i­cal Cen­ter, Wilkes-Barre, Pa. “You wind up with huge vari­a­tion in pay­ment” that frus­trates pay­ers, care­givers and pa­tients alike, he says.

In es­tab­lish­ing bun­dled pay­ments, Geisinger was try­ing to in­tro­duce some pre­dictabil­ity for a spe­cific episode of care, in ad­di­tion to re­mov­ing vari­a­tion among these pa­tients in terms of re­source us­age. In ad­di­tion, it was trans­fer­ring the fi­nan­cial risk of com­pli­ca­tions and read­mis­sions from the payer and hand­ing that re­spon­si­bil­ity to the providers to af­fect pa­tient out­comes.

In essence, “You’re throw­ing the ball into the court of the clin­i­cians and hos­pi­tals, and they de­cide how you divvy up the good­ies pro­vid­ing care,” Casale says.

Mean­while, 490-bed Hill­crest Med­i­cal Cen­ter, Tulsa, Okla., part of Ar­dent Health Ser­vices, re­ports a sim­i­lar suc­cess story with bundling.

One of the five sites par­tic­i­pat­ing in the CMS’ Acute Care Episode demon­stra­tion project, Hill­crest es­ti­mates it has saved nearly $730,000 since it be­gan im­ple­ment­ing the ACE demon­stra­tion in May 2009 (April 6, 2009, p. 32).

Bundling is a “win, win, win” for the hos­pi­tal, doc­tor and pa­tient, says Steve Landgarten, CMO of eight-hos­pi­tal Ar­dent, head­quar­tered in Nashville.

It al­lowed Hill­crest “as a com­mu­nity hos­pi­tal to ad­dress pa­tients’ and physi­cians’ fi­nan­cial needs, so doc­tors could work with us to main­tain high-qual­ity out­comes and re­duce the cost of those out­comes. Ev­ery­body gets a piece of re­duced costs to con­tinue high­qual­ity out­comes.”

The con­cept of “bundling,” which es­sen­tially means pay­ing providers a fixed amount per month or year for all cov­ered ser­vices, has specif­i­cally been tagged by the Obama ad­min­is­tra­tion as a cost-sav­ing mea­sure. Last year, the new ad­min­is­tra­tion es­ti­mated that bundling Medi­care pay­ments cov­er­ing hos­pi­tals and posta­cute care could save as much as $17 bil­lion over the next 10 years.

In ad­di­tion to the CMS’ ACE demon­stra­tion, the fed­eral govern­ment plans to do more test­ing in the fu­ture, pos­si­bly through a na­tional, vol­un­tary, five-year pi­lot on bundling pay­ments that was au­tho­rized by the new health law and would get un­der way in 2013.

A num­ber of pol­icy de­vel­op­ments have gone into the pro­mo­tion of bundling pay­ments for episodes of care, says Peter Hussey, a pol­icy re­searcher at RAND Corp.

“There’s bi­par­ti­san agree­ment into this idea that fee-for-ser­vice is a ma­jor prob­lem in terms of health­care costs,” Hussey says. “Medi­care cur­rently pays hos­pi­tal care by ad­mis­sion, but there are strong ad­vo­cates who say the fed­eral in­surance pro­gram needs to think even more broadly” when de­sign­ing pay­ments for episodes of care. The fed­eral govern­ment and the pri­vate sec­tor are try­ing to get in front of this, and en­thu­si­asm among the provider groups and em­ploy­ers is build­ing to pay by value rather than vol­ume, Hussey says.

At least in the pri­vate sec­tor, the train driv­ing pay­ment bundling seems to be mov­ing along at a steady clip.

In ad­di­tion to Geisinger, other pri­vate-sec­tor or­ga­ni­za­tions, in­clud­ing the Brook­ings In­sti­tu­tion and the In­te­grated Health­care As­so­ci­a­tion in Cal­i­for­nia, are test­ing vari­a­tions of the pay­ment model. At the state level, Min­nesota has a 2008 law im­ple­ment­ing “bas­kets of care.” Early this year the state be­gan bundling pay­ments based on episodes of care, Hussey says.

“The pri­vate sec­tor is right not to wait around” for the fed­eral govern­ment to take the lead on bundling, says Deirdre Bag­got, ad­min­is­tra­tor for car­diac and vas­cu­lar ser­vices at 361-bed Ex­em­pla St. Joseph Hos­pi­tal in Den­ver. “They want to ex­plore this as a vi­able pay­ment strat­egy.”

Two-hos­pi­tal Ex­em­pla Health­care is an­other hos­pi­tal sys­tem par­tic­i­pat­ing in the three-year ACE demon­stra­tion. The oth­ers in ad­di­tion to Hill­crest are 1,275-bed Bap­tist Health Sys­tem, with four cam­puses in San An­to­nio; 78-bed

Casale: The ball is in the court of hos­pi­tals and clin­i­cians.

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