A Real-­World Look at Bun­dled Pay­ments

A TALE OF TWO BUN­DLES

Modern Healthcare - - POLITICS -

Bun­dled pay­ments al­low care co­or­di­na­tion from the point of view of the pa­tient and al­low all clin­i­cians the op­por­tu­nity to work to­gether to cre­ate com­mon met­rics, share pro­to­cols, and drive to a col­lec­tive out­come. They are gain­ing tremen­dous mo­men­tum across all lines of busi­ness, and on a na­tional scale. Why?

The Cen­ters for Medi­care and Med­i­caid, em­ploy­ers and pay­ors are all ex­tremely in­ter­ested in bun­dled pay­ments be­cause they cre­ate an op­por­tu­nity to fo­cus care on pa­tients that have his­tor­i­cally been tough to man­age, and have driven sig­nif­i­cant costs.

Bun­dles also of­fer the chance to im­prove mar­ket share in more prof­itable com­mer­cial busi­ness. For many, they cre­ate an op­por­tu­nity to start down the value-­‐based re­im­burse­ment path. For or­ga­ni­za­tions that have al­ready be­gun that jour­ney, bun­dles can fur­ther lev­er­age in­te­gra­tion ini­tia­tives and ac­cel­er­ate im­prove­ments in cost, qual­ity and pa­tient ex­pe­ri­ence.

The pro­grams are in­deed gain­ing mo­men­tum, and there is now some ur­gency about mov­ing for­ward. Medi­care has in­tro­duced the Com­pre­hen­sive Care for Joint Re­place­ment pro­gram, the first time that bun­dled pay­ments will be manda­tory in the Medi­care space. As health­care lead­ers know, where Medi­care goes, most ev­ery­one fol­lows. Ini­tially, provider or­ga­ni­za­tions will see up­side in­cen­tives when they de­liver agreed-­‐upon out­comes, but even­tu­ally, down­side risk will be part of the equa­tion. So there’s a first-­‐ mover ad­van­tage for or­ga­ni­za­tions that can get into pro­grams, un­der­stand how to man­age them cor­rectly, or­ga­nize physicians to de­liver the right out­comes, and un­der­stand their own data in terms of op­ti­mal pric­ing, cost and care de­sign.

How to De­sign, Im­ple­ment and Op­er­ate a Bun­dled Pay­ment Pro­gram

Data an­a­lyt­ics is cru­cial to suc­ceed­ing in bun­dled pay­ments. Know­ing which parts of your busi­ness are most prof­itable and which are poised for growth will help you iden­tify the best can­di­dates for bun­dled pay­ments.

Just a cou­ple ex­am­ples of what’s needed in­cludes bench­mark­ing data, com­par­ing your sys­tem or hos­pi­tal’s per­for­mance within your mar­ket, re­gion or na­tion­ally; and cost break­outs on a DRG level. “We’ve seen clients who have this kind of data at their fin­ger­tips, and oth­ers who took six months to build some­thing,” said Brent Hill, vice pres­i­dent at Va­lence Health.

To ac­cept lower mar­gins, as is re­quired with bun­dled pay­ments, or­ga­ni­za­tions must latch onto two strate­gies: strict con­trol of costs and

pre­dictabil­ity. Th­ese are es­pe­cially im­por­tant when de­cid­ing which physicians will par­tic­i­pate the bun­dle. “Out­comes and qual­ity take cen­ter stage here,” Hill said. For ex­am­ple, sur­geons with higher read­mis­sion rates should not see bun­dled pa­tients— at least ini­tially. “Once you de­cide who’s in and who’s out, and how they can get in over time, you’ll see other ben­e­fits out­side this ini­tial group of ap­proved physicians,” Hill said.

A Tale of Two Bun­dles: Govern­ment Payor

A Va­lence Health part­ner, a health sys­tem, took part in the Bun­dled Pay­ments for Care Im­prove­ment (BPCI), Medi­care’s bun­dled ini­tia­tive for to­tal hips and knee re­place­ments. The govern­ment set up the pro­gram: in­dex­ing ad­mis­sions, look­ing at 30 days post-­‐acute trends and set­ting prices based on his­toric spend.

While the govern­ment took its sav­ings right off the top, it also pro­vided a num­ber of waivers and an op­por­tu­nity for gain shar­ing, so providers could share in the sav­ings.

Medi­care pro­vided the data set, “rich with in­sights,” to re­view how pa­tients are ar­rayed and how ser­vices are rated across the episode of care, set­ting a stan­dard level of care. Based on those stan­dards, the sys­tem was able to pin­point the qual­ity and ef­fi­ciency op­por­tu­ni­ties for im­prove­ment.

When the pro­gram was ad­min­is­tered, se­lec­tion of the pa­tient was crit­i­cal: Does this pa­tient ac­tu­ally need this pro­ce­dure? Have we man­aged risk fac­tors up­front so read­mis­sion or ad­verse event like­li­hood was re­duced?

The re­sults: Medi­care saved money, the health sys­tem gen­er­ated sig­nif­i­cant ad­di­tional sav­ings that could be used for new in­cen­tives for physicians as well as PRE­SENTED rein­vest­ment, BY: and ev­ery mea­sure of qual­ity and ef­fi­ciency im­proved. “Most im­por­tantly, this co­or­di­nated ap­proach cre­ated an op­por­tu­nity to im­prove across the board by mea­sur­ing ev­ery as­pect im­por­tant to the out­come,” said Michael McMil­lan, se­nior vice pres­i­dent of strate­gic so­lu­tions for Va­lence Health.

A Tale of Two Bun­dles: Com­mer­cial Payor

A dif­fer­ent Va­lence Health part­ner took part in a com­mer­cial bun­dle. This hos­pi­tal had strong sup­port from its board to move into value-­‐based re­im­burse­ment, and saw a com­mer­cial bun­dle pro­gram as a vi­able route.

Af­ter many months of cost vari­a­tion anal­y­sis, the hos­pi­tal was able to iden­tify which ser­vices to in­clude based on mar­ket data. Then it set a price tar­get based on the mar­gins it was com­fort­able giv­ing up and what vol­ume it was ex­pect­ing to gain. The de­sign in­cluded lim­it­ing which physicians were al­lowed in the bun­dle.

This hos­pi­tal started work­ing di­rectly with em­ploy­ers, and along the way in­vited pay­ors to get in­volved. The re­sults were pos­i­tive and in the end, the bun­dle:

• Sparked a ma­jor boost in qual­ity and greater cost man­age­ment

• De­liv­ered sig­nif­i­cant mar­ket share in­creases in spe­cific ser­vice lines

• At­tracted net new cases

• In­creased pa­tient sat­is­fac­tion and elim­i­nated out-of­‐pocket costs

• Built stronger re­la­tion­ships with pay­ors and em­ploy­ers

• Helped ad­vance value-­‐based con­tract­ing

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