3 Health Systems, 3 Bundled Payment Models

Three organizations discuss their experiences with CMS's bundled payment initiative.

For 120 years, Lawrence, MA-based Home Health Foundation  has considered itself to be an innovative organization, so when it got the chance to participate in Model III of CMS's Bundled Payments for Care Improvement (BPCI) initiative, Peg Doherty, senior vice president of operations and strategic planning, says the decision was a "no-brainer."

"We definitely wanted to do it," she says. "We took the risk not so much to make money, [but]… to put our money where our mouth is and really deliver on what the system expects us to deliver on right now."

What the system expects them to deliver on is care that's both high-quality and cost-efficient. And that's what the BPCI initiative is ultimately trying to achieve.

"The best care is usually the lowest cost care. That's just a fact," Doherty says. "Bad care costs money. Frequent re-hospitalizations, frequent emergency room visits, lots of infections; all that costs money. So the best care delivers the best clinical outcome most efficiently."

As of mid-August, 360 organizations have entered into bundled payment agreements with CMS. An additional 1,755 organizations are partners in the program. Within the initiative are four models that vary by episodes of care; which services are included in the bundle; and whether the payments are retrospective or prospective.

"Over the course of the initiative, CMS will work with participating organizations to assess whether the models being tested result in improved patient care and lower costs to Medicare," according to the BPCI initiative's website.

Home Health Foundation is participating in Model III, which is for retrospective post-acute care only, in the congestive heart failure bundle for 60-day episodes of care.

"We're responsible for the 60 days of care starting on the first day that we provide care," Doherty says. "Once [patients are] under our care, we're responsible for all of their emergent, and pretty much all of their elective readmissions, and all of their post-acute care."

She says the only way a post-acute provider can "beat the bet finically, is by preventing re-hospitalization."

"The largest chunk of money that's spent post-acute is in re-hospitalization," she says. "Almost 50% of the cost that's associated with the bundle is for re-hospitalization. And we're on the hook for re-hospitalization; and if after the re-hospitalization they go to an SNF [skilled nursing facility], we're on the hook for that; and if they're in SNF then go to another home health agency, we're on the hook for that."

It's a pretty big risk, Doherty acknowledges, but she also believes it's an "important" one for her organization.

BCPI Model IV
Jeffery D. Hurst, senior vice president and senior finance officer at Florida Hospital agrees, and would advise other healthcare leaders to take advantage of pilots like the bundled payment program now.

"Healthcare, and the future of healthcare, is about change and transformation, so take advantage of innovation pilots like BPCI to prepare your organization," he says via email. "Start small, learn as much as you can, and then transition rapidly and effectively to our new future."

Florida Hospital is participating in Model IV, where the time period for the clinical episode is three days prior to admission, the admission itself, and 30 days post-discharge. Payment is prospective, rather than retrospective. Hurst says that Florida Hospital selected model IV because it believed that the model provided more financial stability and predictability than the others.

"We believe we will have to accept more risk as we progress with our transition, but our preference is to do so in a manner that allows for as much financial stability and predictability as possible," Hurst says.

Florida Hospital included 12 clinical episodes (valve DRGs 216 – 221 and coronary artery bypass graft DRGs 231–236) in its pilot, which formally launched on January 1, 2014. Currently, its participating providers include 125 physicians in 10 different groups across multiple specialties.

"Going forward, we intend to maintain our focus on clinical performance, including readmissions and LOS, but also supply utilization and cost. Additionally, we still have improvements to achieve in our various revenue cycle processes, specifically as it relates to payment timeliness and payment accuracy," Hurst says. 

"Lastly, we want to improve the granularity, sophistication and timeliness of our metrics and analytics, as we believe our ability effectively understand our data in as timely a manner as possible will be key to our success on all outcomes, clinical and financial."

BCPI Model II
Geisinger Health System has already seen improvements since it started Model II on Jan 1, 2014 at three hospital campuses: Geisinger Wyoming Valley, Geisinger Medical Center, and Geisinger-Shamokin Area Community Hospital.

John Bulger, DO, MBA, chief medical officer for the Geisinger Health Plan, says the data shows that "it's improved with every quarter," both financially and for decreasing variation in patient care across providers.

But bundled payments aren't new for Geisinger, which has "been doing bundled payment for some time in a partnership between our clinical enterprises and our health plan," Bulger says. Bundling "engenders collaboration between providers," he adds.

Now, in working with CMS, post-acute partners are involved, too. That's certainly changed the game, since Bulger says most of the cost is in the post-acute space.

"The way to impact that is preparation upfront," Bulger says. That involves things like risk stratification for the patient before surgery: Which patient has uncontrolled diabetes? Who might benefit from a smoking cessation program? It involves asking, who will the patient see throughout their care experience?

"You're really taking it apart soup to nuts," Bulger says. In that way, bundled payments not only align providers and incentives, but "in the long run it's much better for the patient as well."

For her part, Doherty says it's too soon to tell whether the risk for Home Health Foundation will pay off, but she is optimistic.

"If we can prevent unnecessary emergency room visits and unnecessary hospitalizations, patients will have better clinical outcomes, and we will also have good financial outcomes," she says. "Organizations that embrace this…should be applauded for their willingness to take a risk and have a vision as to how it might be better for patients."