Bundled Payments

Bundling: Can Bundles Lower Your Healthcare Costs?

Agenda

• What is a Bundle/Episode

• Successes in Bundles

• Challenges in Implementing Bundles

• Commercial Bundles

• Medicare Bundles

• Questions

“In God we trust. All others must

bring data.”

“It is not enough to do your best; you

must know what to do, and then do your

best.”

- W. Edwards Deming

First Things First: Defining An Episode of Care

• Which conditions – and triggers of – or procedures are included in the definition?

• What providers and/or services should be included, excluded?

• What quality measures, if any, are included?

• Are the payments risk adjusted?

• How should the amounts charged be determined?

• Should payments be prospective or retrospective?

• Upside/downside of risk: Is it both or upside only? Do you cap gain sharing and risk?

• Should the episode include a single condition or should interrelated conditions be

captured as well? How do you adjust payment for these?

When defining an episode, you should consider:

What Services Are Included in an Episode of Care for Major Acute Care?

Length of Time

Physicians

Pre-admission Hospitalization Post-Acute Care

Readmission

PCP PCP PCP PCP

Surgeon Surgeon Surgeon Surgeon

Other Specialist Other Specialist Other Specialist Other Specialist

DevicesImaging

Imaging,Implants, etc.

Imaging Imaging

Drugs Drugs Drugs Drugs Drugs

Non-MD Staff Hospital StaffHome Care

Hospital StaffPCP Care Manager

FacilityHospital Rehab Facility Hospital

DRG* Long-Term Care DRG

Providers

and

Services

Source: http://www.chqpr.org/downloads/transitioningtoepisodes.pdf

*Diagnosis-related group

Fee-for-Service vs. Bundled Payments

Variations in Charges, Spending

The Evolution of Bundled PaymentsAccording to National Association of ACOs, 2015

Successful Commercial Bundled Pilots

In the private sector, programs such as UnitedHealthcare’s oncology model and the Pennsylvania Employees Benefit Trust Fund (PEBTF) pilot program for total hip and knee replacements, have produced savings, as well.

• UnitedHealthcare’s model for cancer care led to a reduction in the episode costs of 810 patients by about $33 million.

• PEBTF’s bundled payment program for total hip and knee replacements, resulted in decreases in outpatient costs by, on average, $3524. However, inpatient costs remained about the same.

Example: Health Plan A

Knee Replacement

• Fee for service cost: $35,400

• Bundled Payment Cost: $27,900

21% Average savings with bundled payment

• Readmission Rates reduced by 17 percent

• Complications rates reduced by 4 percent

Example: Health Plan B

Current Episodes

30% Savings• Total Knee

• Total Hip

• Knee Arthroscopy

• Colonoscopy

• Breast Cancer

• CHF

• CABG Hysterectomy

• Colon Cancer

• Chronic Care Episodes (Diabetes, Asthma)

Success of Medicare Bundles

• Payments declined by an estimated $1,166 more than the comparison group

• The SNF payments declined $546

• IRF payments declined $445

https://jamanetwork.com/journals/jama/fullarticle/2553001

Success of Medicare Bundles (cont.)

• Under the BPCI initiative, Medicare payments declined for most clinical episodes and over half of the relative payment reductions were statistically significant.

• The declines were primarily due to relative reductions in the use of PAC. The Medicare payment reductions occurred under Model 2 and 3 and across participant types as well as a range of surgical, acute, and chronic clinical episodes.

• Quality of care, measured as emergency department visits, mortality, and readmissions, was not affected in the vast majority of clinical episodes.

https://jamanetwork.com/journals/jama/fullarticle/2553001

Challenges Implementing Bundles with Traditional Commercial Plans

• Data

• Legacy Systems

• Achieving economies of scale

• Managing costs beyond the provider’s control

Current Commercial Landscape

• 1.6% of commercial payments through bundled payments in 2013

• Source: Catalyst for Payment Reform

• Estimate of less than 2% of commercial payments are through bundled payments as of April 2018

• Source: American Journal of Managed Care. https://www.ajmc.com/contributor/suzanne-delbanco/2018/04/the-current-evidence-for-bundled-payment

Current Medicare Episode-Based Payment Initiatives

• Medicare Bundled Payment for Care Improvement (BPCI)

• Oncology Care Model

• Comprehensive Care for Joint Replacement (CJRP)

Medicare Bundled Payment for Care Improvement (BPCI)

• BPCI is a Voluntary program

Started in 2013

Ends December 31, 2018

1025 participants in Phase 2

• 48 Episodes of Care; 120+ diagnosis-related groups

• 30-, 60-, 90-day episode periods

BPCI vs. BPCI-Advanced, 2019BPCI BPCI Advanced

Bundle Period 30-, 60-, or 90-day period 90-day periods only

Episodes Covered 48, Inpatient 29 inpatient and 3 outpatient

Types of Entities that Can Own a Bundle

Acute care hospitals, physician groups,

skilled nursing, long-term care,

inpatient rehab, home health

Acute care or physician groups

Advanced APM N/A Yes

Risk Adjustment of Target Price N/A Yes

Timing of Risk Phased In Payments at risk from Day 1

Reconciliation ProcessQuarterly; optional reconciliation across

episode types

Semi-annual; mandatory reconciliation across

episode types

Centers for Medicare Services Discounts (CMS) 2 percent (model 2) 3 percent

Payment Linked to Quality Measures N/A Yes

Number & Type of Quality MeasuresVariable; proposed by individual

participants & agreed on with CMS

Two universal measures (readmissions

& advanced care planning) plus specific

quality measures for multiple-episode

BPCI Advanced, Defined

• Voluntary model

• A single retrospective bundled payment and one risk track, with a 90-day clinical episode

duration

• 29 inpatient clinical episodes

• 3 outpatient clinical episodes

• Qualifies as an advanced APM

• Payment is tied to performance on quality measures

• Preliminary target prices provided in advance of the first performance period of each

model year

BPCI Advanced (cont.)Understanding Convener Participants

A Convener Participant is a type of participant that brings together multiple downstream entities, such as:

• Acute care hospitals

• Physician groups

• Skilled nursing centers

• Inpatient rehab and long-term care facilities

• Home health agencies

What Organizations Qualify

Can participate as a Convener Participant:

• Eligible entities that are Medicare-enrolled providers or suppliers

• Eligible entities that are not enrolled in Medicare

• Acute Care Hospitals (ACHs)

• Physician Group Practices (PGPs)

Can participate as a non-convener participant

• Acute Care Hospitals (ACHs)

• Physician Group Practices (PGPs)

Clinical Episodes In StudyLiver disorders, excluding malignancy, cirrhosis, alcoholic hepatitis* Gastrointestinal obstruction

Acute myocardial infarction Hip & femur procedures except major joint

Back & neck except spinal fusion Lower extremity/ humerus procedure except hip, foot, femur

Cardiac arrhythmia Major bowel procedure

Cardiac defibrillator Major joint replacement of the lower extremity

Cardiac valve Major joint replacement of the upper extremity

Cellulitis Pacemaker

Cervical spinal fusion Percutaneous coronary intervention

COPD, bronchitis, asthma Renal failure

Combined anterior posterior spinal fusion Sepsis

Congestive heart failure Simple pneumonia and respiratory infections

Coronary artery bypass graft Spinal fusion (non-cervical)

Double joint replacement of the lower extremity Stroke

Fractures of the femur and hip or pelvis Urinary tract infection

Gastrointestinal hemorrhage *(New episode added to BPCI Advanced)

Measurements of Quality

Two of the seven quality measures -- All-cause Hospital Readmission Measure and Advance Care

Plan-- will be required for all Clinical Episodes. The other five quality measures will only apply to

select Clinical Episodes:

• Perioperative Care: Selection of Prophylactic Antibiotic: First or Second Generation

Cephalosporin (NQF #0268)

• Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total

Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550)

• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary

Artery Bypass Graft Surgery (NQF #2558)

• Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (NQF #2881)

• AHRQ Patient Safety Indicators (PSI 90)

Oncology Care Model

• July 1, 2016 – June 30, 2021

• 178 practices, 14 payers

• Episode-based payment model targets chemotherapy and related care during a 6- month period that begins with receipt of chemotherapy treatment

• Emphasizes practice transformation Physician practices are required to implement “practice redesign activities” to improve the quality of care they deliver

• Multi-payer model Includes Medicare fee-for-service and other payers working in tandem to leverage the opportunity to transform care for oncology patients across the practice’s population

Source: https://innovation.cms.gov/Files/slides/ocm-overview-slides.pdf

Provide Enhanced Services

• Provide Oncology Care Model (OCM) beneficiaries with 24/7 access to an appropriate clinician who has real-time access to the practice’s medical records

• Provide the core functions of patient navigation to OCM beneficiaries

• Document a care plan for each OCM beneficiary that contains the 13 components in the Institute of Medicine Care Management Plan

• Treat OCM beneficiaries with therapies that are consistentwith nationally recognized clinical guidelines

OCM-FFS Two-Part Payment Approach

Additionally, OCM has a two-part payment approach:

1. Monthly Enhanced Oncology Services (MEOS) Payment

• Provides OCM practices with financial resources to aid in effectively managing and coordinating care for Medicare FFS beneficiaries

• The $160 payment for OCM enhanced services can be billed for OCM FFS beneficiaries for each month of their 6-month episodes, unless they enter hospice or die

2. Performance-Based Payment (PBP)

• The potential for a PBP encourages OCM practices to improve care for beneficiaries and lower the total cost of care during the 6-month episodes

• The PBP is calculated retrospectively on a semi-annual basis based on the practice’s achievement on quality measures and reductions in Medicare expenditures below target price

Comprehensive Care for Joint Replacement (CJR)

• April 2016 – December 31, 2020

• 465 hospitals in 68 MSAs participating (data as of 2/1/18)

• Hip & Knee replacements

Takeaway

“Insanity is doing the same thing over and over again and expecting different results.”

-Albert Einstein

Questions?Thank you.

ProviDRS Care | 1102 S. Hillside, Wichita, KS 67211 | ProviDRsCare.net | 800-801-9772 | 316-683-4111