Bundled Payments: Are they the way of the future?

March 22nd, 2018
Bundled Payments: Are they the way of the future?

Over the last two years, we have been hearing the term "bundled payments" more and more frequently. You might be wondering, what is this reimbursement model all about? We are going to break down what you need to know to make the best decision for your facility.

What are bundled payments?

Bundled payments are a type of reimbursement model that encourage collaboration between hospitals and outpatient providers. When a patient receives care for a certain condition over a defined period, this is considered an "episode of care." The provider and/or healthcare facility is paid a single payment for the services performed during that episode of care. This payment is calculated by considering the average spending per care episode in the hospital's U.S. Census Division. The target payment is compared to the actual amount spent on that episode of care. The difference in these values determines whether the provider receives a payment penalty or bonus. Pretty simple, right?

If you are still a bit confused, I'll give you an example. Currently, if a patient wants to have knee surgery they would receive care from the hospital, an orthopedic surgeon, and an anesthesiologist separately. The payer (Medicare, Medicaid, Insurance Company, etc.) would reimburse each provider separately for tasks performed during the surgery, for a total of three payments. A bundled payment model would cause there to only be one pre-determined payment. That payment would be distributed to one entity and would then be split among providers. In another potential scenario, the payer would pay each provider separately, but would adjust the payment for the work each provider performed. No matter how the payment is distributed, the result is the same. One set payment for each episode of care the patient receives (no matter how many providers or locations the patient went to!)

But wait…not all patients are the same. How can providers receive the same payment for all patients when some patients are prone to more "issues" than others? Age and pre-existing conditions cause post operation complications that may be unavoidable. These patients are considered high risk and payment should be adjusted for this. Centers for Medicare and Medicaid Services listened to feedback received, and on January 3, 2017 released the 2017 Final Rule. Within that rule, they disclosed their intent to explore and implement additional adjustments to bundled payments to account for patient complexity. But, at this point, there has not been a modification to the way the target payment is calculated.

While CMS determines how they would like to account for patient complexity, providers need to evaluate how they can successfully benefit from this reimbursement model. The best way to do this? Spend more time setting expectations with your patients before surgery. Providers are used to counseling patients on their BMI and smoking status prior to surgery, but surgery is performed whether the patient adjusts their lifestyle or not. The key to being successful in this payment model is to take a personal investment in that patient's success. Instead of counseling on the issues, suggest exercise and diet plans that will help them and be honest with them regarding the impact that it has on the success of their surgery. Another component is discussing post-discharge expectations. When patient understand the discharge process and the steps that need to take to ensure a safe and strong recovery we see improved percentages of patients that are discharged home rather than to other (expensive) healthcare facilities.

When all is said and done, these steps encourage patient engagement. With the patient more engaged, there is a better understanding of the surgery process and the patient may be inclined to contact their surgeon or primary care physician before running to the Emergency Department. Overall, this allows providers to make more money. Once patients start to discuss the quality of their care with other patients, providers will be sure to see an increase in patient numbers.

Currently these bundles are voluntary, and it's a good thing that they are. This reimbursement model requires a complete remodeling of the way providers communicate with each other. It also will change the way each provider handles patient encounters. Developing a process for this will take time, but it is not something that should be ignored. CMS just announced a new voluntary bundled payment initiative, The Bundled Payments for Care Improvement Advanced (BCPI Advanced) model. This model will build on the current bundled care initiative and now qualifies as an Advanced APM, which means full participation in bundled payments would eliminate the need to participate in the Merit-based Incentive Payment System (MIPS). Take some time to consider whether this could be an option for you practice. Communicate with your affiliated hospital and discuss what steps you would need to take to participate in this reimbursement model. No matter what you decide to do, one thing is for sure, CMS is dedicated to changing the way providers make money. The days of patient quantity over patient quality are over. If you are interested in joining the BCPI Advanced model check out the link here, https://innovation.cms.gov/initiatives/bpci-advanced.

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