More Bundled Payment Models on the Way

For years, the Centers for Medicare & Medicaid Services (CMS) has researched and developed new care reimbursement models in hopes of achieving better healthcare outcomes at a lower cost. Among the most discussed of these currently is the bundled payment—shifting more risk to hospitals but also rewarding them for collaborating with other providers to reduce complications, prevent hospital readmissions and improve the overall patient experience.

In April 2016, CMS launched its first mandatory payment bundles for joint replacement surgeries—expanding in summer 2017 to include femur fracture with hip replacement—at 698 hospitals. The approach makes it imperative that affected providers collaborate with physicians, complete a risk assessment on patients and design patient-specific care paths.

Reimbursement is based on a weighted average of three-year historical data from both the facility and the region. As the program matures, only regional data gets used to calculate a facility’s “target” price, creating full-on competition among providers to outperform their peers in the market. Hospitals that hit their targets are eligible for reconciliation payments, while those that miss become subject to repayment penalties.

While the Trump administration is expected to make some changes to the Affordable Care Act, bundled payments are not likely to be dissolved. “When the new administration recognizes bundled payments are achieving the objectives to better coordinate care, reduce overall costs and improve the management of a population of patients across a defined episode of care, I don’t believe they will cancel the new mandatory bundles, though they may slow their rollout,” says Todd DeVree, director of bundled payment solutions at HealthTrust. “I think this model will continue to grow in the coming years.”

More Mandatory Bundles

In December 2016, the Department of Health & Human Services finalized its ruling on episode payment models for cardiac care that will go live in 98 randomly selected markets on July 1, 2017. In each location, acute care hospitals will be the initiators of the episodes and bear the financial risk for all related care within 90 days of a patient’s hospital discharge—just like with the initial orthopedic bundles.

CMS will continue to reimburse providers on a fee-for-service basis, but at the end of each performance year make adjustments—positive or negative—based on the target price and the hospital’s quality score. Hospitals can opt to have no downside risk for the first two performance years, but, in exchange, the potential to earn reconciliation payments is limited.

A new feature introduced through the cardiac bundles is incentive payments for hospitals that motivate patients to participate in cardiac rehab. CMS will pay selected hospitals $25 per cardiac rehab service for each of the first 11 visits and $175 per visit thereafter.

Assuming these new requirements are not rescinded by the Republican administration, hospitals must increasingly prepare to operate under bundled payment arrangements. Although bundled payments are currently mandated only for certain surgeries and geographies, providers can expect their use will eventually expand to other types of care across U.S. markets.

Instituting Best Practices

To successfully operate under the incentives of bundled payments, teamwork is essential. Physicians and hospitals need to collaborate to improve care, says Dwight Tyndall, M.D., spine surgeon and partner at the Center for Minimally Invasive Surgery in Munster, Indiana, and a physician advisor for HealthTrust. “Physicians are a key component in this process, as they usually have a better understanding of the type of care needed by patients undergoing various procedures.”

For instance, many patients with hip and femur fractures “spend the entire 90-day post-discharge period in a skilled nursing facility. They tend to be frail and have more comorbidities,” explains Gregory Brown, M.D., Ph.D., orthopedic surgeon at Franciscan Orthopedic Associates in Tacoma, Washington, and orthopedic physician advisor for HealthTrust.

Physician engagement and alignment are the most important components in improving coordinated care and overall success under bundled payments, DeVree says. “But many hospitals struggle to effectively engage their surgeons. Without physician buy-in and leadership, the program will have limited success,” he adds.

At CHI Franciscan Health, also in Tacoma, bundled payments for total joint replacements have worked well when a team of providers works toward the same goal. To enable each patient’s discharge to home, coaches or caregivers are identified early, health educators provide mandatory preoperative joint classes for patients and nurse navigators coordinate care. The team also collaborates on setting expectations for a one- or two-day hospital stay and discharge to home, which “strongly influences hospital length of stay,” Brown says. After discharge, patients receive follow-up calls from a nurse navigator and have immediate access to a surgeon, nurse practitioner or physician assistant to avoid unnecessary ER visits or readmissions.

In addition to physician leadership in managing care episodes, hospitals need visibility into how well they’re doing from both a quality and cost perspective if they hope to operate profitably under bundled payments. “It’s hard to plan if you don’t know what your costs are,” Tyndall notes.

HealthTrust’s inSight Advisory Services team provides physician alignment strategies and guidance, risk-adjusted and benchmarked data to identify care variations and opportunities for improvement, toolkits that help standardize care for like patients, and IT platforms to streamline the capture and reporting of patient-reported outcomes—all of which can help maximize provider performance under bundled payments. But, as stated previously, success starts with physician engagement and alignment—these remain a top challenge for many hospitals.

“There’s not one approach to successfully working with physicians because every hospital is unique,” DeVree says. “There are best practices for each environment and, fortunately, HealthTrust has had experience in most of them. Increasingly, members are relying on us to help facilitate those key relationships.”

HealthTrust’s inSight Advisory Services—Clinical Integration Providing consulting & analytics in the areas of:

  • Bundled Payments
  • Physician Engagement
  • Care Redesign
  • Clinical Data & Benchmarking
  • Medical Device Management
  • Patient Engagement & Patient-reported Outcomes
  • Cost Optimization
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