Bundled Payment Models in Health Care
Over the past several years, the path from volume to value for providing health care has become more defined. While several different models remain and are being implemented, the overall strategy is intended to use the reimbursement system to incentivize providers to coordinate and be accountable for patient outcomes. As these models develop, health systems are adapting by modifying their integration strategies across the continuum of care.
Bundled payment models are quickly becoming the new norm because of their potential to enhance care coordination. The May issue of Healthcare Financial Management Magazine discusses this emerging trend of bundle payment and CoxHealth’s voluntary bundled payment agreement: “CoxHealth, a five-hospital health system in Missouri, entered a voluntary bundled payment arrangement—a joint quality improvement project with Cox HealthPlans—in 2014 with a primary goal of reducing readmissions,” the article reads.
The Comprehensive Care for Joint Replacement (CJR) Model, implemented April 1, is a bundle payment model that requires acute care hospitals in certain geographies to receive retrospective bundled payments for Medicare beneficiaries for lower extremity joint replacement or reattachments of lower extremities. This is the first part of an expected rollout that will encompass most of the care delivered to Medicare beneficiaries.
A comprehensive understanding of cost, quality and reimbursement is needed to evaluate the impact of these emerging payment models. Medicare has published data on the various pilot programs, including pioneer Accountable Care Organizations (ACOs) and the Bundle Payments for Care Improvement (BPCI) model programs. These programs have reported mixed success. Some of the challenges involve the reimbursement system itself, however, there are key learnings from these programs that a health system may use to identify areas of improvement. Health information technology (HIT) is enabling these key capabilities:
Interoperability – Sharing information across venues of care and health systems enables providers to have a complete view of the patient’s records, helping to develop a comprehensive care plan.
Analytics – Gathering data across a health system involves validating data consistency and/or converting aggregated data so it is easy to understand. For example, combining data from an Electronic Health Record (EHR) may have one record for each provider, while older billing systems may require one provider to have several records based on the different roles and billing scenarios. Assessing the cost across service lines and activity-based costing should be components of the analytics.
Reimbursement Management – Once the payments are consolidated into a bundle, the management of the allocation of funds becomes more challenging. Similar to the Diagnosis-Related Group (DRG), there is no specific allocation for a subset of services. However, in instances where not all of the venues are wholly owned, the payment to external providers becomes critical.
In addition to HIT, relationships are needed across venues of care, including strategies with payers and employers. The desire of the Centers for Medicare and Medicaid Services (CMS) to expand value-based reimbursement is well publicized. The specific strategies required to be successful will vary by system, but one thing is clear: health care is changing more rapidly than ever before.