Doubling Down On Bundled Payments
Imagine that your knee has been bothering you. You visit your primary care physician who then refers you to a specialist. The specialist decides you need surgery. After surgery, you are discharged home or to a skilled nursing facility. Through each step of the care episode, you move from one provider to the next, but no one is truly coordinating your care during the transitions and no one is ensuring an optimal outcome.
This hypothetical situation is the reality for many. The average Medicare beneficiary with a hip fracture will see six different physicians throughout their episode of care. This fragmented care is why healthcare spending has been on the rise, and as a result, the Center for Medicare & Medicaid (CMS) has established and tested numerous value-based payment models aimed at improving quality and lowering costs. One model they have doubled down on is bundled payments.
In 2013, CMS created the voluntary Bundled Payments for Care Improvement (BPCI) initiative. Following the success of that program, they have since launched the Oncology Care Model (OCM), another voluntary program, and the Comprehensive Care for Joint Replacement (CJR) model, a mandatory program. They also have published the final rule for the Episode Payment Model (EPM), a mandatory hospital bundled payment program for AMI and CABG patients, as well as an expansion of the CJR program. All of these programs are designed to bring more efficient and effective care to specific conditions known to generate high risk and high costs.
In a bundled payment contract, the episode initiator, which could be the hospital, skilled nursing facility or specialist, agrees to a set fee for an entire episode of care. This includes the costs for the surgery or treatment, inpatient stay, and all post-acute care for a set period of time. Essentially, the provider is at-risk for the patient’s care, generating savings when it goes well and loss when extra care is needed.
This means stakeholders are rewarded for identifying and improving risk factors, optimizing care, and remaining more actively involved in post-acute care management. With bundled payments, the “owner of the bundle” acts as quarterback of the patient’s entire care episode.
Many providers are experiencing success in their bundled contracts. Two-thirds of providers surveyed in the PwC Strategy & Annual Bundles Survey, 2015/2016 report improved quality and reduced costs with their programs.
Their success is highly dependent on two factors: coordination and data.
In bundled payments, providers must address the gaps in care during a patient’s recovery, and must know where their patients are and how they are doing. With a concerted effort to coordinate and understand a patients’ recovery status, providers can identify and address problems early, helping to avoid hospital readmissions.
After testing out bundled payments for joint replacements, leaders at the Cleveland Clinic shared that having a specialty care coordinator is a necessary factor for success in the CJR program. As a patient’s main point of contact, the coordinator synthesizes information from all of the caregivers and communicates it with the patient. “We saw how a patient’s phone conversation with a care coordinator after discharge made it possible to avoid an ED visit and possible hospitalization.”
In addition to coordinating care, providers need to have comprehensive analytics and data-sharing abilities to develop a strong network with partner organizations. Organizations must have the ability to track patients across the care continuum, monitor outcomes, and identify areas for improvement to enhance care and reduce costs—all in real-time.