Q: How do bundled reimbursements fit into healthcare reform?
Gilbert D’Andria: Bundled reimbursements, which cover an entire episode of care, both inside and outside the hospital, will be used to pay accountable care organizations. Bundled payment strategies will be a necessity for an ACO to operate. Since ACOs are due to start on Jan. 1, 2012, it is important to start setting up systems that can handle bundled payments. I recommend starting with just one or two bundles and working up from there.
Q: How does the Episode of Care Bundled Reimbursement Solution work?
GD: MedAssets is incorporating its Episode of Care Bundled Reimbursement solution with the Health Care Incentives Improvement Institute’s PROMETHEUS Payment Model. PROMETHEUS has a payment calculation platform that supports a methodology called an evidence-informed case rate. The ECR is a budget for a comprehensive episode of care within a set period of time. It includes prices of all covered services, bundled across all providers who would typically be involved in a given condition. These rates are adjusted for the severity and complexity of the patient’s condition.
Q: How does the software calculate a bundled payment?
GD: It uses a credit/debit system that reconciles the actual cost of care versus the predicted cost of care for a bundled payment, based on existing claims data. It adjusts risk according to a patient’s demographic profile and medical history. Our platform combines a claims-tracking and financial-accounting system. It also has a scorecard that uses data from claims and other sources to measure quality of care.
Q: Is the Episode of Care Bundled Reimbursement Solution in use anywhere yet?
GD: There are three pilots – in Rockford, Ill., Grand Rapids, Mich., and Portland, Ore. – that are using it or are in the process of using it. Each involves payor providing a bundled payment and providers receiving it. They are health systems that have their own health plan, which are great places to experiment with this sort of thing. Each one is trying out one or two bundles.
Q: Do these pilots have any outcomes to report yet?
GD: It’s too early to make conclusions. I wouldn’t want to discuss any details about them without the participants’ permission.
Q: What is the biggest hurdle in switching to bundled payments?
GD: The biggest hurdle is trying to understand how the system works. That is, the education piece. Care coordination is going to be central. Physicians will have to communicate with each other for this to work.
Q: Bundled payments seem a lot like capitation payments, which generally failed in the 1990s. How are they different?
GD: Capitation rates failed because they were set arbitrarily, but bundled payments are set more rationally, based on historic costs. There will be quantitative quality metrics that more precisely measure outcomes. Bundled payments are also risk-adjusted, according to the patient’s medical history and case severity. This means there will be less of a chance for providers to cherry-pick healthier patients.
Q: Will bundled payments be a compelling incentive for physicians?
GD: They will likely be much more robust than the 2 percent profit share of the Pay for Performance program, which has not been very compelling for physicians. To develop a bundled payment, the payor identifies the average payment for a service and rewards providers whose charges are below that figure. Let’s say the average payment for a particular procedure is $24,000. The providers’ charge for the procedure is $16,000 because there were no complications and they kept expenses in check. That’s a savings of $8,000 and the providers get a significant share of that.
Q: When HHS issues proposed regulations on how bundled payments will work, will the Episode of Care Bundled Reimbursement Solution have to be extensively rewritten?
GD: This should not be a problem. The software is solid enough that it can adapt to changes, as long as they are variable changes.
Read the MedAssets release on the Episode of Care Bundled Reimbursement Solution.
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