Ask a healthcare C-level leader what's keeping him or her up at night and chances are the Comprehensive Care for Joint Replacement (CJR) rule and payment model that takes effect this month wouldn't even crack the top 10 list.
Currently, CJR only covers two DRGs for Medicare beneficiaries and is only being implemented in 67 metropolitan statistical areas, at least initially. What makes it worthy of burning the midnight oil is the fact that the model represents the most aggressive catalyst yet in the march from fee-for-service to fee-for-value.
Since it became law in 2011, the powerful Patient Protection and Affordable Care Act has been used to roll out a series of first "carrots" and, more recently, "sticks" to accelerate the move to a value-based healthcare payment system. One could wager that CJR is the tip of the spear as the United States fundamentally reshapes how we provide and pay for healthcare. Healthcare executives have never been "wake me when it's over" types, but they are being faced now with what I see as three significant challenges by the CJR bundled payment model.
More Risk
If you think of value-based reimbursement as a destination that the Secretary of Health and Human Services is trying to get to, you'll see that risk – the possibility of things like penalties and lower revenue – represents the sleeper strategy to get there. The government is counting on the fact that providers who are more at risk for the cost of the care will begin to build the infrastructure needed – the programs and services and capabilities – to manage the end-to-end, cost-to-care continuum.
The real wake-up call about the CJR legislation is that hospitals are now held accountable for the total cost of care, from the point of admission until 90 days after the care was provided. This means the hospital provider bears the risk for the procedure itself, the inpatient stay and all care related to the patient's recovery. Throwing another wrinkle in the bedsheets is the fact that post-acute service reimbursement dollars will still be paid directly to post-acute providers. Their world isn't changing – at least not quite yet.
Assuming more risk over this extended period will likely cause hospitals to rethink their networks top to bottom. I would suggest that they'll seek to establish narrow vs. broad ACO networks and look to influence patients to choose care partners who can allay the hospital's risk. The most attractive partners? Post-acute facilities who are able to measure quality, who have transparency into their internal cost structures, and who consistently rank high on quality care and patient satisfaction measures.
Lack of Patient Control
The big "but" in this legislation that is causing eyes to open a little wider is that while hospitals will be taking risk for these patients, they have no ability to control where the patient goes for post-acute care. Let's stop and think about that for a moment: how can hospitals truly get their hands around what happens to a patient when the patient is no longer in their direct care?
The early answer seems to be a renewed emphasis on discharge management and care coordination. However, I'd counter that hiring staff to manually pick up phones and make post-discharge follow-up calls to patients at regular intervals isn't a sustainable solution. One, because even a comprehensive follow-up pattern of calls on Day 3 post-discharge, Day 5 and Day 7, can't account for the patient who falls on Day 8. And two, because patients who flourish post-discharge are apt to resent being "followed up on" multiple times as hospitals attempt to manage their risk.
To make up for less control, hospitals will need to look past EMRs and EHRs and toward programs that increase patient engagement, that create "stickiness," if you will, in the hospital-patient relationship. If hospitals and health systems can foster greater loyalty with people and improve patient education around discharge options, they can potentially persuade patients to choose a post-acute option within the web of providers the hospital recommends and with whom it has a track record.
Complete Paradigm Shift
CJR and the idea of bundled payment reimbursement is a wake-up call if there ever was one. It's Health & Human Services saying in this election year that value-based healthcare is here to stay. To hospitals, it's a paradigm shift of massive proportions because it's turning departments that were once revenue streams into cost centers. In the new world order of bundled payments, no longer is the government going to reimburse for every scan or additional procedure ordered. The government is going to pay a fixed amount for the care of a patient over a period of time. CJR is just the first step of what will become the bundled payment norm.
Hospitals in 67 markets are suddenly responsible for care across the continuum even if they don't own it and don't control it; with that comes clinical and business challenges and an increased demand for technology-enabled care coordination. What an army of discharge planners can't do, can be done with electronic flags that alert clinical professionals when intervention should occur. This change in value proposition won't be easy for hospitals, post-acute providers, or for patients. But aligning the incentives of the delivery system with the reimbursement system is necessary if we hope to lower the $3 trillion spent on healthcare1, and lower the 17.52 percent slice of the United States' Gross Domestic Product (GDP) consumed by healthcare.
Instead of losing sleep over the organizational changes that CJR represents and will require, I suggest we should all look at this newest bundled payment model as a new dawn. With preparation and planning – two things hospital CEOs excel at – we can mitigate the financial risk at hand. Ultimately, I believe CJR and bundled payment reimbursements that are likely to come are a chance to reset our thinking around what our organizations and physicians are paid to do currently, and what patients really want us to do – which is keep them well.
1 National Health Expenditure Data, 2014. Source: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html
2 National Health Expenditure Data, 2014. Source: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html
Wayne Sensor brings more than 25 years of hospital and health system experience as he works to advise Ensocare during an exciting time of exponential growth. He has been recognized by government, political and industry leaders for achievements in quality, transparency, consumer engagement and wellness.
Wayne is the former CEO of Alegent Health, a 10-hospital system serving Nebraska and Iowa, and Christus Schumpert Health System in Louisiana. Most recently, he was a partner at Leavitt Partners serving as the lead executive advising large health systems. Wayne also currently serves on the Board of Directors for HealthEast Care System, the largest healthcare provider in St. Paul, Minnesota, with four hospitals and 13 neighborhood clinics. Wayne earned a master's degree in business administration from St. Ambrose College and a bachelor's degree in business management from the University of Northern Iowa. He is a published author and sought-after keynote speaker.
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