How To Win Under Bundled Payments
More and more hospitals are engaging in value-based models that put them at financial risk for poor outcomes or excess costs, and reward them for effective and efficient care. But do they have strategies in place to help them limit and manage excess costs?
Dr. Donald Fry, executive vice president for clinical outcomes management at MPA Clinical Solutions, presented his recommendations on how hospitals can prepare for these unknowns during a webinar on April 18. The entire webinar can be accessed at ModernHealthcare.com/BundledPayments.
1 Intelligent bundles inherently link quality and cost
Strong bundled payment programs reward efficiency and penalize over-utilization of resources by setting a budget. Providers who don’t use their resources optimally under these programs are punished with adverse outcomes that lead to excess costs and smaller margins. “If you bring cases in with adverse outcome rates that are less than what the model would identify, you have increased margins, and if you underutilize resources and have increased adverse outcomes as a consequence, the payment model will punish you. It is a prospectively risk adjusted budget,” Fry said.
2 Determine the risks that come with your patient population
Each patient is intrinsically different, and some patient characteristics that influence outcomes are beyond the control of providers. Even if a patient may not incur any complications during their stay, their treatment costs may be higher than average if they presented with a highly severe case. Bundle budgets should account a wide range of case severity, building potentially higher costs into the surgical warranty.
3 Prepare for bumps in the road with a surgical warranty
Providers and payers must build a surgical “warranty” into their total prospective payment that anticipates a certain rate of adverse outcomes and the cost that comes with them. This provides a financial cushion for the hospital and guards against “cherry picking” of patients because it provides a strong reward for high-quality care of a high-risk patient. The warranty must account for anything that could be responsible for excess costs, including the costs and consequences of death, prolonged length of stay and post-discharge deaths, among other possibilities.
4 Know your outcomes
Hospitals and surgeons need to know their performance and how it benchmarks with their counterparts across the nation. Providers should get a grip on pain management issues, infection rates and comorbidities that can lead to adverse outcomes. Patients with high-risk comorbidities could incur complications that need to be addressed in post-discharge followup and management. “Not paying attention to those details could have profound and serious economic repercussions,” Fry said.
5 Identify post-discharge stakeholders so that you can collaborate on care
Physicians and hospitals must work together to resolve post-discharge complications before they require readmission. Over half of patients readmitted within 30 days didn’t see a physician after discharge, per MPA data. Evolving models are likely to extend the readmissions metric to 90 days after discharge, Fry said, as over 40% of admissions occur in days 31 to 90. Providers need to be aware of their post-discharge outcomes if they intend to engage in bundled payments.