Bun­dled-pay­ment demo shows re­turns

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Bun­dled-pay­ment demo starts show­ing re­turns

Let’s say a pa­tient goes into a hos­pi­tal for hip re­place­ment surgery, and a few months later, gets a check in the mail for $300. And let’s say the or­tho­pe­dic sur­geon who re­placed the hip gets to pocket a cou­ple ex­tra hun­dred dol­lars in the deal. The hos­pi­tal where the surgery takes place, mean­while, slashes its costs and im­proves qual­ity.

That’s what ap­pears to be hap­pen­ing at Bap­tist Health Sys­tem in San An­to­nio be­cause of a Medi­care demon­stra­tion project on global pay­ments. The acute-care episode, or ACE, demon­stra­tion project launched at Bap­tist Health in June 2009. Four other hos­pi­tals or sys­tems are also par­tic­i­pat­ing in the three-year pro­gram.

The global pay­ment cov­ers all Medi­care Part A and Part B ser­vices for Medi­care feefor-ser­vice pa­tients re­quir­ing in­pa­tient stays for spec­i­fied pro­ce­dures, or “episodes.” These episodes are re­stricted to se­lect car­dio­vas­cu­lar or or­tho­pe­dic pro­ce­dures. Two of the five sites are run­ning the demon­stra­tion in both cat­e­gories, while the other three in­volve only car­diac care or or­tho­pe­dics.

The hos­pi­tals must meet and ex­ceed cer­tain qual­ity bench­marks to par­tic­i­pate. They com­mit to a lower pay­ment from Medi­care, while physi­cians can get as much of a 25% bonus on top of their full Medi­care pay­ment per episode. The bonus comes from gain­shar­ing, where the hos­pi­tal and physi­cians share sav­ings from low­er­ing the costs of med­i­cal de­vices used in the pro­ce­dures by open­ing fresh ne­go­ti­a­tions with sup­pli­ers.

“To me, that’s been the magic of this whole pro­gram,” says Michael Zucker, se­nior vice pres­i­dent and chief devel­op­ment of­fi­cer at Bap­tist Health. “We can im­pact costs and qual­ity when we are aligned.”

Dur­ing the past 18 months, Bap­tist Health has reaped $4 mil­lion to­tal in de­vice and sup­ply sav­ings, pass­ing on $558,000 to the 150 physi­cians par­tic­i­pat­ing. The nearly 2,000 pa­tients who have re­ceived surg­eries un­der the pro­gram have re­ceived $60,000 back for their trou­ble, or about $300 a pa­tient, Zucker says. “If you were to take the ACE pro­gram away to­day, peo­ple would re­sist,” he says.

There have been bumps in the road, mostly get­ting the pro­gram started. Two of the sites launched the demo a year and a half late. Ex­em­pla St. Joseph Hos­pi­tal in Den­ver and Lovelace Health Sys­tem, Al­bu­querque, both started on Nov. 1. The CMS says these pro­grams will run a full three years.

Both or­ga­ni­za­tions say the CMS and the con­trac­tor man­ag­ing the project de­layed the start be­cause of tech­ni­cal prob­lems.

The ACE demo project is be­ing man­aged by Trail­Blazer Health En­ter­prises, a Dal­las-based sub­sidiary of Blue Cross and Blue Shield of South Carolina. Trail­Blazer has been a CMS con­trac­tor for 40 years and has about 1,000 em­ploy­ees. In 1999, the South Carolina Blues pur­chased Trail­Blazer from Blue Cross and Blue Shield of Texas.

Sheila Ste­wart, di­rec­tor of the ACE demon­stra­tion project at Trail­Blazer, says the pro­gram has been tricky only in the sense that it is a new way of pay­ing claims. But it has not re­quired any ad­di­tional staff, and about four peo­ple are ded­i­cated to the project, al­though other em­ploy­ees work on it.

CMS of­fi­cials say the de­lays at Ex­em­pla St. Joseph and Lovelace were caused by is­sues in trans­fer­ring billing pro­cesses from a pre­vi­ous con­trac­tor to Trail­Blazer and ramp­ing up for the switch to bun­dled pay­ments. The de­lay was not caused by the hos­pi­tals, ac­cord­ing to the CMS.

Trail­Blazer’s job is to en­sure hos­pi­tal claims get paid, while the hos­pi­tal is re­spon­si­ble for pay­ing physi­cians for their ser­vices. Trail­Blazer pro­vides weekly data re­ports to each fa­cil­ity, telling them which physi­cian claims were filed for which ben­e­fi­cia­ries. Trail­Blazer also pro­vides monthly and quar­terly sum­maries on ad­mis­sions, ben­e­fi­cia­ries and to­tal Part B pay­ments.

So a par­tic­i­pat­ing physi­cian files a claim for a pro­ce­dure to Medi­care, then the claim gets flagged as ser­vices pro­vided to a pa­tient in the ACE demo. This claim doesn’t get paid. In­stead, it goes into a “com­mon work­ing file” at Trail­Blazer that cap­tures Part A and Part B—hos­pi­tal and physi­cian—claims for ACE episodes of care. Then the Trail­Blazer Part B sys­tem pro­cesses the claim and pays the hos­pi­tal the full amount.

Ev­ery week, Trail­Blazer sends an en­crypted disk via overnight de­liv­ery to each hos­pi­tal de­tail­ing the week’s claims. The hos­pi­tal then dou­ble-checks the data and pays out the amount due to the physi­cians.

Send­ing the data by overnight de­liv­ery in­stead of elec­tron­i­cally causes a one-week lag in pay­ments, ac­cord­ing to providers, but the files can­not be sent over un­se­cure e-mail or other com­mon sys­tems be­cause of fed­eral pa­tient pri­vacy laws. Ste­wart says Trail­Blazer could set up a se­cure elec­tronic sys­tem to han­dle the data, but that the hos­pi­tals pre­fer us­ing overnight de­liv­ery.

Ste­wart says some hos­pi­tals strug­gled at first to han­dle the re­ports be­cause of their com­plex­ity. While Trail­Blazer pro­vided ed­u­ca­tional train­ing to each hos­pi­tal, she said some hos­pi­tals pro­vided more train­ing than oth­ers.

“It’s a lit­tle dif­fi­cult, but it’s claims,” Ste­wart says. “Claims pro­cess­ing is not sim­ple.”

Last month, HHS’ of­fice of the in­spec­tor gen­eral is­sued a re­port find­ing that in­pa­tient rehabilitation cen­ters in­cor­rectly coded 24 out of 51 claims re­viewed for dis­charged and trans­ferred pa­tients in 2007, re­sult­ing in Trail­Blazer mak­ing $162,000 in over­pay­ments to the fa­cil­i­ties in four South­ern states. Trail­Blazer has since cor­rected flaws in its sys­tem and re­cov­ered $155,355 of the over­pay­ments, ac­cord­ing to the re­port. The out­stand­ing amount has also been re­funded, ac­cord­ing to the re­port.

Mean­while, all five of the or­ga­ni­za­tions par­tic­i­pat­ing in the ACE project say they are happy over­all with out­comes so far.

“Since the launch, it’s gone with barely a hitch,” says Dr. Lisa Ket­ter­ing, vice pres­i­dent of med­i­cal af­fairs and chief med­i­cal of­fi­cer at Ex­em­pla St. Joseph, which has three car­diac sur­geons par­tic­i­pat­ing so far.

Al­ready, Ex­em­pla St. Joseph has seen a bump in some qual­ity mea-

Bap­tist Med­i­cal Cen­ter’s par­ent has reaped $4 mil­lion in de­vice and sup­ply sav­ings so far.

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