Bundled payments feasibility tested

After almost a year of preparation, 450 healthcare organizations begin taking part in Medicare's Bundled Payments for Care Improvement initiative this month. The goal is to evaluate if paying for care by episodes really can improve quality and reduce Medicare's costs.

Bundled payments are still relatively untested at scale, and providers are learning that this pilot is only one option for moving bundled payments forward.

[See also: Bundled payments no sub for transparency]

Currently, most hospitals know only what a patient costs from admission to discharge. What they don’t track is what providers patients might have seen before surgery, where patients are being sent after discharge and why, how long they might stay in rehab and if they were readmitted later. 

DataGen has worked with hospitals to identify what providers need to be successful in a bundled payment system, data is primary.

“Medicare is now providing data and saying, ‘Help us out here, be our partners because now you see what we see,’” said Gloria Kupferman, vice president of national information products for DataGen. “The one really vital piece to see if good decisions are being made is the data.”

Through the Medicare program, the Centers for Medicare & Medicaid Services is providing data so hospitals can evaluate all providers to see if the discount will cover their costs as part of a package.

[See also: CMS announces 500 organizations will participate in bundled payment initiative]

Physician leadership is critical

Physician leadership is also necessary because the savings required for bundles aren’t typical bean counting like reducing supply costs, Kupferman said. Considering patient handoffs and avoiding readmissions are made at the provider level.

While it may sound like a good opportunity, Kupferman said that not everyone planning on taking part decided to go forward with it. One organization that did not was UMass Memorial Medical Center.

“We considered joining the Medicare program but it didn’t really make sense financially,” said Gene Shirshak, vice president for health policy and public programs at the hospital. “It is a tough program; you need to give a discount off the top, you don’t get investment dollars and you have to hope you get a share of the savings.”

Shirshak said the organization was just beginning to figure out what their outcomes would be so they weren’t yet able to gauge if the program would be adequate for them. CMS was taking “a long time” to get the data back and forth and establish fees as well. She said earlier demonstrations hadn’t required an upfront discount and provided a greater market incentive – steering patients toward centers of excellence in certain areas.

“We were just getting started and figuring out what our outcomes would be,” she said. “We couldn’t say, ‘We will save a certain percent so it’s going to be worth doing. I think at this point we will reassess and are looking at the data and thinking about joining the program on the second round.”

What the hospital has done, however, is create its own packages. They have one “relationship” with a payer in the area of total joint replacement, Shirshak said, but they don’t consider their programs traditional bundles. They look at episodes of care from admission to discharge or post-acute care and bundle together the charges for the hospitals and physicians – or Part A and Part B. What this does is help align incentives for hospitals and doctors, something that is totally disparate in healthcare now.

Looking at total cost of episode of care and aligning incentives

Dr. Paul Lofrumento, senior director of the musculoskeletal program, said an example is when surgeons choose which implant to use with a patient. This is a very costly decision and regardless of the cost of the implant, the hospital gets paid the same amount. But if the physician’s reimbursement is dependent upon what is left over after an implant is paid for, it should make them more conscious of the choices being made, he said.

“We are looking at the total cost of an episode of care, aligning incentives and understanding which treatment decisions impact the cost,” he said.

The changes they ended up making were top-down, said Dr. David Ayers, chair of orthopedics and physical rehabilitation. They increased patient education classes so patients know what is expected of them during the process. They created a program where every patient receives an at-home assessment prior to admission to see their environment and look for things that might be fall hazards. They have a patient navigator available 24 hours, seven days a week. They also changed their pain protocol, replacing general anesthesia with long-acting novocaine and spinal anesthesia.

Ayers said the hospitals’ efforts have borne results. Before the changes, the average length of hospital stay was 3.6 days; in 2013 it was 2.9. The number of patients discharged directly to their homes instead of skilled nursing facilities rose from 60 percent to 65 percent after implementation.