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CMS Unveils 4 Bundled Payment Models

 |  By cclark@healthleadersmedia.com  
   February 04, 2013

From Edison, NJ to San Bernardino, CA, some hospitals and doctors will soon embrace big financial risks with four federal bundled payment models that allow them to reap some avoided Medicare costs, even though it may mean absorbing excess patients' expenses up to 90 days after they leave acute care settings.

"For doctors who have never managed care before, who stay independent, and have done a lot of fee for service medicine, this is a way to start changing the culture, which is what we need to do because the old dis-aggregated, specialty driven fee-for-service system is what's bankrupting this country," says Steven Barron, President of 463-bed St. Bernardine Medical Center in San Bernardino, CA.

William Oser, chief medical director of 498-bed JFK Medical Center in Edison, NJ, says that by working with doctors to be more efficient, and streamlining hospital services, for example adding certain test procedures on weekends, length of stay and therefore costs can be reduced.

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"What we found is that if we are thoughtful, and actually in some cases provide more care but on a more timely basis, it's better for the patients and at the end, more efficient and less expensive."

Last week the Centers for Medicare & Medicaid Services officially rolled out these four models of bundled payments prescribed by the 2010 healthcare reform law. They are intended to drive efficiency in the care of expensive Medicare patients. The models' designs vary in how they bundle episodes of care, and may even vary with each hospital's negotiated contract.

CMS said in a news release Thursday that 500 hospitals will participate at one level or another, although only 32, including St. Bernardine, 343-bed Community Hospital San Bernardino, and JFK, are opting for Model 1 when the program kicks off in April.

The Association of American Medical Colleges has 10 hospitals—from University of California San Francisco Medical Center to Albert Einstein Healthcare Network in Philadelphia—participating in Models 2 and 4.



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This effort necessitates hospitals and doctors "looking in depth at the current processes of care in the preadmission period, in  admission period, in post-acute period in the primary care period and really evaluating, where's the waste, where's the inefficiency, where are the quality problems right now?" says  Coleen Kivlahan, MD, the AAMC's Senior director of Health Care Affairs. "And where are we doing things that we don't really, have evidence base attached to those, and eliminate those."

The bundling models also requires that hospitals meet quality metrics and mortality statistics, to make sure that patients are better off, or at least no worse off than they were through the traditional payment model.

JFK's Oser says CMS' official bundled payment announcement extends a project his hospital has been doing for several years, and they've already realized what efforts seem to work.

For example, he says, in addition to adding weekend services to speed care and reduce lengths of stay, JFK added a second CT scanner to speed imaging. It also created multidisciplinary rounds, including respiratory therapists and pharmacists for every patient.

And JFK is streamlining and narrowing the variation by which doctors treat heart failure patients, and for patients who present in the emergency department with heart issues, there are protocols that call for a cardiologist to be present within the first 12 hours.

"If we work harder during the discharge to make sure the patient is educated, and understands medications, there's a higher likelihood of compliance," Oser says.  

"We can probably safely treat and care for the patient and discharge them in [fewer] days than we formerly did because of a less disciplined or less consistent practice, and we can minimize the likelihood  that they're going to be readmitted to the hospital in the next 30-60 days."


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St. Bernardine's Barron says that at his hospitals, the project includes nurse practitioners making daily phone calls to certain Medicare beneficiaries with chronic disease up to 30 days, and make sure medications are appropriate and that they're able to see an appropriate physician quickly.

"Sometimes the medications the hospitalist gives are not the same as what's on their formulary with their insurance plan, or what their primary care physician or cardiologist wants them to have," Barron says. "Sometimes they don't get in to see their doctor immediately after discharge, and things can get mixed up."

 

 

But Barron and others acknowledge that the program is gambling that the hospitals won't lose money. "We're at risk for everything that happens 30 days post-discharge on the part A side" if it exceeds the established baseline, he says.

Barron is certain that his hospitals should go forward now and learn what they can, and not "just wait and try to bilk the last dollars out of the system as long as we can."

Rather, he says, those networks who figure out how to improve care and be more efficient, "who know how to manage populations and improve quality will deliver a value proposition, and they will be successful, and will be where the business is going. The future is not that far ahead. We think that by 2017, the whole system will be largely reformed."

4 Bundled Payment Models

1. Retrospective Acute Care Hospital Stay Only
Medicare pays the hospital a discounted amount based on the traditional Inpatient Prospective Payment System DRG rate, and pays physicians under their traditional fee schedules. But hospitals and physicians are permitted to share gains arising from the providers' care redesign efficiencies. 

The hospital, however, is responsible for some financial risk if Medicare Part A and Part B expenditures increase beyond a risk threshold for the period of the inpatient stay or during the 30 days after discharge, compared to historical expenditures.

2. Retrospective Acute Care Hospital Stay plus Post-Acute Care
The episode includes the acute care inpatient stay and all related services during the episode. The episode will end either 30, 60, or 90 days after hospital discharge. Participants can participate in any of up to 48 clinical condition episodes, from amputation to treatment of major vascular disorders. 

 

3. Retrospective Post-Acute Care Only
The episode is triggered by an acute care hospital stay and begins at initiation of post-acute care services with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. The post-acute care services included in the episode must begin within 30 days of discharge from the inpatient stay and will end either a minimum of 30, 60, or 90 days after the initiation of the episode. Participants can participate in any of the 48 clinical condition episodes.

In both Models 2 and 3, the bundle includes physicians' services, care by post-acute providers, related readmissions, and other related Medicare Part B services included in the episode definition such as clinical laboratory, durable medical equipment, prosthetics, orthotics and supplies; and Part B drugs. A target price is set based on historical fee-for-service payments for the participant's Medicare beneficiaries in the episode and will include a discount. 

Payments will be made at the usual fee-for-service payment rates, after which the aggregate Medicare payment for the episode will be reconciled against the target price. Any reduction in expenditures beyond the discount reflected in the target price will be paid to the participant and may be shared among their provider partners. Any expenditures that are above the target price will be repaid to Medicare by the participant.

4. Acute Care Hospital Stay Only
CMS will make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians, and other practitioners. Physicians and other practitioners will submit "no-pay" claims to Medicare and will be paid by the hospital out of the bundled payment. Related readmissions for 30 days after hospital discharge will be included in the bundled payment amount. Participants can select up to 48 different clinical condition episodes.

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