Bundled payments are becoming an increasingly important part of the healthcare landscape – even while The Centers for Medicare and Medicaid Services (CMS) considers their future in Medicare.
A recent study found that the CMS pilot for the bundled payment program – Comprehensive Care for Joint Replacement (CJR) – is saving millions of dollars without negatively impacting patient care. The study found that hospitals saved an average of eight percent under the program, while some saved much more.
In addition, many large corporations – including General Electric, Boeing, and Wal-Mart – have begun to directly purchase employee healthcare in bundles.
Yet, CMS recently postponed the start date of its new mandatory bundled payment models and amendments to CJR from October 1 to January 1, 2018. This delay was not surprising. US Department of Health and Human Services Secretary Tom Price opposes the bundled payment programs. Price’s position on this issue, coupled with the postponement of the programs’ start date, has ignited speculation that the program may be eliminated or modified to allow hospitals to opt out.
“Regardless with what happens with the Medicare bundles,” said Saqib Akhter, the CEO of Post Acute Analytics, “the commercial bundles have become meaningful. The feedback we have gotten is that the majority of payers today are talking to providers about bundles and entering bundle contracts.”
Price has been skeptical that bundled payments did save money, but the above study found that if every hospital used the bundled payment model, it would save Medicare $2 billion annually.
“I think bundled payments is one of the best programs that CMS has ever rolled out,” said LeAnn Richardson, the director of case management and transitional care for Norman Regional Health System.
“Trying to figure out how to succeed by getting the highest quality outcomes at the lowest cost is Medicare’s intent with the bundled models. I think having health systems balance high-quality outcomes with cost is just smart. In the end, the person who is the winner is the patient. They’re getting better care. They’re getting better uses of their resources so that they are available to use when the patient needs them later on. You don’t want to use up all the resources now and have nothing left.”
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What are Bundled Payments?
The way bundled payments work is that hospitals receive a set fee (a bundled payment) for an episode of care, from pre-surgery through rehabilitation. The goal is to pinpoint the most effective and efficient method of care, so a patient receives the highest quality of care at a reduced cost. This greatly differs from the traditional model where hospitals collect payments for all related components of care, including the surgery and rehabilitation, individually.
“What I like about bundled payments is there’s a balance between the incentives,” said Richardson. “It’s not like the old days where you could manipulate the system to get some money back. The only way you are going to get money back is if you provide really high quality care at a lower cost and have the outcomes to prove that.”
How to Succeed with Bundled Payments
“When we first entered into bundled payments,” said Richardson, “we had a consultant tell us that the spending on our inpatient side was fine, but where we had room for improvement was on the post-acute side. We began making inquiries, looking at the data of how we were spending Medicare post-acute dollars after discharge, and it came to light that we had a pretty big problem with our skilled nursing facilities (SNF).
“We’re the hospital and have absolutely no control over any SNFs or home health agency. So, we found an analytics partner that allows us to get real-time data about our patients once they leave our walls. Sure, we get quarterly updates from Medicare, but 90 days is too long. We have to be able to respond and react before a 90-day problem becomes a six-month problem or longer.
“Without our analytics tool we would not have reduced our length of stay at SNFs by 30 percent. Without that tool we would not be able to identify certain underperforming SNFs so we can reach out and work with them.”
Norman Regional Health System chose to partner with Post Acute Analytics, a company that helps health systems monitor their patients in real time once they are discharged from the hospital.
“We know from several well-documented studies that post-acute care has a lot of inefficiencies,” said Akhter. “According to one study, it accounts for 70 percent variability in Medicare’s costs. Therefore, post-acute outcomes and utilizations need to be streamlined and improved to ensure that, no matter what value-based care programs are being implemented, the patient is successful and costs are appropriate. Our analytics drives attention to where there are opportunities for improvement.
The way Post Acute Analytics helps providers succeed is it keeps track of all their patients in real time – no matter where they are in the post-acute continuum – and alerts the hospitals when a patient is at risk or upside-down in a bundle as it relates to quality or cost. This real-time information enables the hospital to intervene and ensures that patients have a successful outcome. This is opposed to the alternative where a hospital is unaware that a patient had a poor outcome in quality or cost until they spot it in their claims.
“We can stand up a solution in less than 90 days and give health systems the tools to start monitoring their patients in real time and placing them in the appropriate care setting for the right amount of time. We have modules that can be phased in and be added overtime to ensure that the implementation is smooth and fits into their workflow. Most importantly, we start to add value on day one,” said Akhter.
“Almost all of our clients that have started with bundles are or have moved to managing a broader population outside the bundles. With our solution, they can do it very efficiently and easily, while ensuring that they succeed at metrics they are being monitored outside the bundles – like value-based purchasing, ACO, Medicare expenditure per beneficiary, and so forth.”
“I have recommended Post Acute Analytics to every colleague in my area,” said Richardson. “It is the best solution to be able to establish lines of communication between the hospital and the post-acute providers that I have seen. We have been using it for a year. The analytics allows us to pinpoint where we need to make improvements and the facilities where we need to make improvements. And we highlight the ones that are doing a great job and discover their best practices, find out what they are doing that makes them stand out.”