Lawrence General Hospital finds success, few hiccups with bundled payments

Lawrence General Hospital-Lawrence, MA--Photo by Lawrence Family Medicine

When the Centers for Medicare and Medicaid Services mandated that hospitals move from a fee-for-service structure to one focused on care coordination and outcomes, Massachusetts' Lawrence General Hospital had a choice to make: Wait to see if they would be required to tackle bundled payments as a new payment methodology, or make the leap themselves. They made the leap, and they're encouraging others to do the same.

Bundled payments are the reimbursement of healthcare providers on the basis of expected costs for clinically-defined episodes of care. Described as a middle ground between fee-for-service reimbursement and capitation, they've been touted as a strategy for reducing healthcare costs. Lawrence General wanted to test the waters to see if this was true, and while it's been a learning process, Robin Hynds is a believer in their potential.

Hynds is the senior director of care integration and transformation at the hospital, which has a model 2 bundled payment program for its congestive heart failure patients. For 90 days, the hospital is responsible for every health expense the patient incurs in that window.

[Also: Bundled payments save money for big employers, improve care coordination, PBGH exec says]

"We've been preparing for bundled payments for a long time now," said Hynds. "We have such a high percentage of Medicaid patients at the hospital, so Medicare and Medicaid had been looking at care delivery transformation initiatives. We knew we had this opportunity through our ACO a while ago, and we thought we should try to see what bundles were going to look like, knowing we'd probably be mandated in the future anyway. This was a way to dip our toes in the water. It really was an opportunity for us to learn, and also make a little bit of money."

The hospital monitors the effects of this approach very carefully. It has entered into a 50/50 arrangement with Remedy Partners as a convener to manage the bundle, and that partnership gave the journey some focus: The hospital knew, from Remedy's actuarial work, that it had to work on its readmissions, as well as patients' length of stay in its skilled nursing facilities.

"We've learned to really scrutinize our data," said Hynds. "You have to be very nimble in order to change if there are particular issues that are consistent."

[Also: Healthcare orgs ask CMS for changes to cardiac bundled payment programs ahead of rollout]

Lawrence General ran into some issues during the third quarter of this year, when the hospital underperformed financially. Strong first and second quarters helped to offset its third-quarter losses, but the hospital noticed a trend -- some patients needed tertiary care to have valve replacements, something Lawrence General doesn't do in-house. That ate into the facility's wallet, but also provided a valuable lesson.

"That's helpful," said Hynds, "to sort of understand where your pain points can be, even to the granular level of the kinds of patients you're working with, and working with their social determinants of health and coming up with a care plan."

Hynds said that outliers are difficult to manage, and can add up in a bundle. Any organization, she said, should have processes in place to manage those patients as effectively as possible. That requires careful planning, focusing on the patients who are truly at risk.

[Also: CMS: Bundled payment programs already saving in Medicare payouts]

And partnering with other organizations can create cohesiveness. Lawrence General is one of the only hospitals in the country partnering with large skilled nursing facilities to help them with their bundled payments -- which Hynds said is "going very successfully."

Hynds will be speaking on the keys to bundled payment success on Tuesday, Dec. 6 at the Revenue Cycle Solutions Summit in Boston.

Twitter: @JELagasse