Bundled payment

Bundled payment, also known as episode-based payment, episode payment, episode-of-care payment, case rate, evidence-based case rate, global bundled payment, global payment, package pricing, or packaged pricing, is defined as the reimbursement of health care providers (such as hospitals and physicians) "on the basis of expected costs for clinically-defined episodes of care."[1][2][3][4][5] It has been described as "a middle ground" between fee-for-service reimbursement (in which providers are paid for each service rendered to a patient) and capitation (in which providers are paid a "lump sum" per patient regardless of how many services the patient receives).[6] Bundled payments have been proposed in the health care reform debate in the United States as a strategy for reducing health care costs, especially during the Obama administration (2009–present).[7] Commercial payers have shown interest in bundled payments in order to reduce costs.[8] In 2012, it was estimated that approximately one-third of the United States healthcare reimbursement used bundled methodology.[9]

History

In the mid-1980s, it was believed that Medicare's then-new hospital prospective payment system using diagnosis-related groups may have led to hospitals' discharging patients to post-hospital care (e.g., skilled nursing facilities) more quickly than appropriate in order to save money.[10] It was therefore suggested that Medicare bundle payments for hospital and posthospital care;[10] however, despite favorable analyses of the idea,[11][12] it had not been implemented as of 2009.[13]

Bundled payments began as early as 1984 when The Texas Heart Institute under the direction of Denton Cooley began to charge flat fees for both hospital and physician services for cardiovascular surgeries.[5][14] Authors from the Institute claimed that its approach "maintain[ed] a high quality of care" while lowering costs (e.g., in 1985 the flat fee for coronary artery bypass surgery at the Institute was $13,800 versus the average Medicare payment of $24,588).[14]

Another early experience with bundled payments occurred between 1987 and 1989, involving an orthopedic surgeon, a hospital (Ingham Regional Medical Center), and a health maintenance organization (HMO) in Michigan.[5][15] The HMO referred 111 patients to the surgeon for possible surgery; the surgeon would evaluate each patient for free.[15] The surgeon and hospital received a predetermined fee for any arthroscopic surgery performed, but they also provided a two-year warranty in that they promised to cover any post-surgery expenses (e.g., for four re-operations) instead of the HMO.[15] Under this arrangement, "all parties benefitted financially": the HMO paid $193,000 instead of the $318,538 expected; the hospital received $96,500 instead of the $84,892 expected; and the surgeon and his associates received $96,500 instead of the $51,877 expected.[15]

In 1991, a "Medicare Participating Heart Bypass Center Demonstration" began in four hospitals across the United States; three other hospitals were added to the project in 1993, and the project concluded in 1996.[1][16] In the demonstration, Medicare paid global inpatient hospital and physician rates for hospitalizations for coronary artery bypass surgery; the rates included any related readmissions.[1] Among the published evaluations of the project were the following:

By 2001, "case rates for episodes of illness" (i.e., bundled payments) were recognized as one type of "blended payment method" (i.e., combining retrospective and prospective payment) along with "capitation with fee-for-service carve-outs" and "specialty budgets with fee-for-service or 'contact' capitation."[18] In subsequent years other blended methods of payment have been proposed such as "comprehensive care payment",[5] "comprehensive payment for comprehensive care",[19] and "complete chronic care"[20] which incorporate payment for keeping people as healthy as possible in addition to payment for episodes of illness.

The St. Joseph Hospital in Denver held an acute-care episode (ACE) demonstration project in 2003 administered by Deirdre Baggot. Based on the Medicare Prescription Drug Improvement and Modernization Act, the ACE demonstration bundled parts A and B of Medicare for episodes of care.[21]

In 2006-2007 the Geisinger Health System tested a "ProvenCare" model for coronary artery bypass surgery that included best practices, patient engagement, and "preoperative, inpatient, and postoperative care [e.g., rehospitalizations] within 90 days... packaged into a fixed price."[22] The program received national attention including articles in the New York Times [23] and the New England Journal of Medicine[24] in mid-2007. An evaluation published in late 2007 showed that 117 patients who received "ProvenCare" had a significantly shorter total length of stay (resulting in 5% lower hospital charges), a greater likelihood of being discharged to home, and a lower readmission rate compared with 137 patients who received conventional care in 2005.[22]

The Robert Wood Johnson Foundation gave grants beginning in 2007 for a bundled payment project called PROMETHEUS ("Provider payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle-reduction, Excellence, Understandability and Sustainability") Payment.[25] With support of the Commonwealth Fund, the project developed "evidence-informed case rates" for various conditions that are adjusted for severity and complexity of a patient's illness.[26][27][28] The "evidence-informed case rates" are used to set budgets for episodes of care.[27] If actual quarterly spending by health care providers is under budget, the providers receive a bonus; if actual quarterly spending is over budget, payment to the providers is partially withheld.[27] The model is currently being tested in three pilot sites which are scheduled to end in 2011.[27][28]

In mid-2008, the Medicare Payment Advisory Commission made several recommendations along "a path to bundled payment."[29][30] For one, it recommended that the Secretary of Health and Human Services examine approaches such as "virtual bundling" (under which providers would receive separate payments, but could also be subject to rewards or penalties based on the levels of expenditures).[29] In addition, it recommended that a pilot program be established "to test the feasibility of actual bundled payment for services around hospitalization episodes for select conditions."[29]

Just before the Medicare Payment Advisory Commission report was released, the Centers for Medicare and Medicaid Services announced a "Medicare Acute Care Episode (ACE) Demonstration" project for bundling payments for certain cardiovascular and orthopedic procedures.[31] The bundling includes only hospital and physician charges, not post-discharge care; by 2009, five sites in Colorado, New Mexico, Oklahoma, and Texas had been selected for the project.[32] In the project, hospitals give Medicare discounts of 1%-6% for the selected procedures, and Medicare beneficiaries receive a $250–$1,157 incentive to receive their procedures in the demonstration hospitals.[33]

Bundled payments for Medicare were a major feature of a November 2008 white paper by Senator Max Baucus, chair of the Senate Finance Committee.[34] The white paper recommended that the Medicare ACE Demonstration "expand to other sites," "focus on other clinical conditions if certain criteria are met," and "include services that are provided post-hospitalization."[35]

As of 2008, Geisinger's ProvenCare program had "attracted interest from Medicare officials and other top industry players"[2] and had been expanded or was in the process of being expanded to hip replacement surgery, cataract surgery, percutaneous coronary intervention, bariatric surgery, lower back surgery, and perinatal care.[36] Interest in Geisinger's experience intensified in 2009 when newsmedia reports claimed that it was a model for health care reforms to be proposed by President Barack Obama[37] and when Obama himself mentioned Geisinger in two speeches.[7][38]

In July 2009, a Special Commission on the Health Care Payment System in Massachusetts distinguished between episode-based payments (i.e., bundled payments) and "global payments" that were defined as "fixed-dollar payments for the care that patients may receive in a given time period... plac[ing] providers at financial risk for both the occurrence of medical conditions and the management of those conditions."[3] The Commission recommended that global payments "with adjustments to reward provision of accessible and high quality care" (not bundled payments) be used for Massachusetts health care providers.[39] Among the reasons for selecting global payment were its potential to reduce episodes of care and previous experience with this payment method in Massachusetts.[39]

As of 2010, provisions for bundled payments are included in both the Patient Protection and Affordable Care Act and the Affordable Health Care for America Act.[40] The former bill establishes a national Medicare pilot program starting in 2013 with possible expansion in 2016,[41] which is consistent with the Obama proposal.[40] The latter bill requires "a plan to reform Medicare payments for post-acute services, including bundled payments."[40] 450 healthcare organizations participated in the Bundled Payments for Care Improvement (BPCI) initiative held by the Centers for Medicare & Medicaid Services. The program tested the ability of bundling payments for services as a method for improving quality and lowering costs.[21] In June 2016, CMS announced it would be extending the program for two more years.[42]

In July 2015, Centers for Medicare & Medicaid Services announced its proposal to mandate a 90-day bundled payment model as a new program for Medicare beneficiaries undergoing joint replacement called the Comprehensive Care for Joint Replacement initiative. The initiative is based on the Bundled Payments for Care Improvement program launched in 2011 and research from the Acute Care Episode demonstration project. The new program will improve cost efficiencies, patient outcomes, and collaboration among providers for an episode of care. Bundled payments will eliminate the demand for unnecessary testing and treatments.[43] In July 2016, CMS announced three new bundles, referred to as episode payment models (EPMs) aimed at cardiovascular care procedures including acute myocardial infarction (AMI), coronary artery bypass graft (CABG) and hip/ femur fractures. The new model will go into effect on July 1, 2017.[44]

Advantages

Advocates of bundled payments note:

Considerations

Before practices choose to participate in bundled payments, they need to be diligent in researching potential episodes of care that would be amenable to this type of reimbursement. Traditionally, physician’s quality monitoring and improvement is managed by the hospital’s nursing sector. Transitioning to a bundled payment methodology shifts accountability back to physicians, thus considerations for their delivery in an acute care episode is essential as well as realigning strategic nursing priorities to enable the needed capacity for care delivery transformation.[8] Once they have selected and defined an episode of care, they should:

Design Options

Implementation of bundled payments can take many different forms. Several of the key design dimensions include:

Disadvantages

The drawbacks of a bundled payment approach include:

References

  1. 1 2 3 4 5 Cromwell J, Dayhoff DA, Thoumaian AH (1997). "Cost savings and physician responses to global bundled payments for Medicare heart bypass surgery". Health Care Financ Rev. 19 (1): 41–57. PMID 10180001.
  2. 1 2 Miller J (1 June 2008). "Package pricing: Geisinger's new model holds the promise of aligning payment with optimal care". Managed Healthcare Executive. Retrieved 2010-03-11.
  3. 1 2 3 4 Commonwealth of Massachusetts, Special Commission on the Health Care Payment System (16 July 2009). "Recommendations of the Special Commission on the Health Care Payment System. Appendix C: memos on basic payment models and complementary payment-related strategies" (PDF). Retrieved 2010-03-11.
  4. 1 2 3 4 Satin DJ, Miles J (2009). "Performance-based bundled payments: potential benefits and burdens" (PDF). Minn Med. 92 (10): 33–5. PMID 19916270.
  5. 1 2 3 4 5 6 7 8 Miller HD (2009). "From volume to value: better ways to pay for health care". Health Aff (Millwood). 28 (5): 1418–28. doi:10.1377/hlthaff.28.5.1418. PMID 19738259.
  6. RAND Corporation. "Overview of bundled payment". Retrieved 2010-03-11.
  7. 1 2 Obama B (15 June 2009). "Remarks by the President at the annual conference of the American Medical Association". Retrieved 2010-03-11.
  8. 1 2 3 Deirdre Baggot (September 2010). "Bundled Payments: Ten Critical Success Factors". GE Healthcare Camden Group. Retrieved June 13, 2016.
  9. 1 2 Deirdre Baggot (July 2012). "Top 10 Considerations for Clinical Service Line Leaders". GE Healthcare Camden Group. Retrieved June 13, 2016.
  10. 1 2 Neu CR, Palmer A, Henry DP, Olson GT, Harrison S (May 1986). "Extending the Medicare prospective payment system to posthospital care. Planning a demonstration" (PDF). Santa Monica, CA: RAND Corporation. Retrieved 2010-03-11.
  11. Welch WP (1998). "Bundled Medicare payment for acute and postacute care" (PDF). Health Aff (Millwood). 17 (6): 69–81. doi:10.1377/hlthaff.17.6.69. PMID 9916356.
  12. Congressional Budget Office (December 2008). "Chapter 5. The quality and efficiency of health care. Option 30. Bundle payments for hospital care and post-acute care". Budget options. Volume I. Health care (PDF). Washington, DC: Congress of the United States. pp. 62–63. Retrieved 2010-03-11.
  13. Center for Post-acute Studies (2009). "Bundling payment for post-acute care: building blocks and policy options" (PDF). Washington, DC: National Rehabilitation Hospital. Retrieved 2010-03-11.
  14. 1 2 Edmonds C, Hallman GL (1995). "CardioVascular Care Providers. A pioneer in bundled services, shared risk, and single payment". Tex Heart Inst J. 22 (1): 72–6. PMC 325213Freely accessible. PMID 7787473.
  15. 1 2 3 4 Johnson LL, Becker RL (1994). "An alternative health-care reimbursement system -- application of arthroscopy and financial warranty: results of a 2-year pilot study". Arthroscopy. 10 (4): 462–70; discussion 471–2. doi:10.1016/S0749-8063(05)80200-2. PMID 7945644.
  16. 1 2 3 4 Cromwell J, Dayhoff DA, McCall NT, Subramanian S, Freitas RC, Hart RJ, Caswell C, Stason W (1998-07-24). "Medicare Participating Heart Bypass Demonstration. Executive summary. Final report" (PDF). Waltham, MA: Health Economics Research, Inc. Retrieved 2010-03-11.
  17. Liu CF, Subramanian S, Cromwell J (2001). "Impact of global bundled payments on hospital costs of coronary artery bypass grafting". J Health Care Finance. 27 (4): 39–54. PMID 11434712.
  18. Robinson JC (2001). "Theory and practice in the design of physician payment incentives". Milbank Q. 79 (2): 149–77. doi:10.1111/1468-0009.00202. PMC 2751195Freely accessible. PMID 11439463.
  19. Goroll AH, Berenson RA, Schoenbaum SC, Gardner LB (2007). "Fundamental reform of payment for adult primary care: comprehensive payment for comprehensive care". J Gen Intern Med. 22 (3): 410–5. doi:10.1007/s11606-006-0083-2. PMC 1824766Freely accessible. PMID 17356977.
  20. Health CEOs for Health Reform (12 June 2009). "Realigning U.S. health care incentives to better serve patients and taxpayers" (PDF). Washington, DC: New America Foundation. Retrieved 2010-03-13.
  21. 1 2 Jessica Zigmond (January 31, 2013). "More than 450 provider organizations join payment-bundling initiative". Modern Healthcare. Retrieved June 13, 2016.
  22. 1 2 Casale AS, Paulus RA, Selna MJ, Doll MC, Bothe AE Jr, McKinley KE, Berry SA, Davis DE, Gilfillan RJ, Hamory BH, Steele GD Jr (2007). "'ProvenCareSM': a provider-driven pay-for-performance program for acute episodic cardiac surgical care" (PDF). Ann Surg. 246 (4): 613–21; discussion 621–3. doi:10.1097/SLA.0b013e318155a996. PMID 17893498. Archived from the original (PDF) on 2010-08-27.
  23. Abelson R (17 May 2007). "In bid for better care, surgery with a warranty". New York Times. Retrieved 2010-03-11.
  24. Lee TH (2007). "Pay for performance, version 2.0?" (PDF). N Engl J Med. 357 (6): 531–3. doi:10.1056/NEJMp078124. PMID 17687128. Archived from the original (PDF) on 2010-08-27.
  25. Gosfield AG (June 2008). "Making PROMETHEUS payment rates real: ya' gotta start somewhere" (PDF). Princeton, NJ: Robert Wood Johnson Foundation. Retrieved 2010-03-13.
  26. de Brantes F, Camillus JA (April 2007). "Evidence-informed case rates: a new health care payment model" (PDF). Washington, DC: The Commonwealth Fund. Retrieved 2010-03-13.
  27. 1 2 3 4 de Brantes F, Rosenthal MB, Painter M (2009). "Building a bridge from fragmentation to accountability--the Prometheus Payment model". N Engl J Med. 361 (11): 1033–6. doi:10.1056/NEJMp0906121. PMID 19692682.
  28. 1 2 Prometheus Payment, Inc. "Our funding". Retrieved 2010-03-13.
  29. 1 2 3 4 5 Medicare Payment Advisory Commission (June 2008). "Chapter 4. A path to bundled payment around a hospitalization". Report to the Congress: reforming the delivery system (PDF). Washington, DC: Medicare Payment Advisory Commission. pp. 80–103. Retrieved 2010-03-11.
  30. Hackbarth G, Reischauer R, Mutti A (2008). "Collective accountability for medical care--toward bundled Medicare payments" (PDF). N Engl J Med. 359 (1): 3–5. doi:10.1056/NEJMp0803749. PMID 18596270.
  31. Alexander J (2008). "Payment by episode: momentum building for bundling?". Healthc Financ Manage. 62 (7): 40–1. PMID 18683410.
  32. Centers for Medicare & Medicaid Services (11 March 2010). "Medicare demonstrations. Details for Medicare Acute Care Episode (ACE) Demonstration". Retrieved 2010-03-13.
  33. 1 2 Galewitz P (26 October 2009). "Can 'bundled' payments help slash health costs?". USA Today. Retrieved 2010-03-11.
  34. Goldstein J (30 January 2009). "Medicare-payment fix weighed". Wall Street Journal. Retrieved 2010-03-11.
  35. Baucus M (12 November 2008). "Call to action. Health reform 2009" (PDF). Archived from the original (PDF) on January 5, 2010. Retrieved 2010-03-11.
  36. Paulus RA, Davis K, Steele GD (2008). "Continuous innovation in health care: implications of the Geisinger experience" (PDF). Health Aff (Millwood). 27 (5): 1235–45. doi:10.1377/hlthaff.27.5.1235. PMID 18780906.
  37. Connolly C (31 March 2009). "For this health system, less is more. Program that guarantees doing things right the first time, for flat fee, pays off". Washington Post. Retrieved 2010-03-11.
  38. Obama B (11 June 2009). "Remarks by the President in towh (sic) hall meeting on health care". Retrieved 2010-03-11.
  39. 1 2 Commonwealth of Massachusetts, Special Commission on the Health Care Payment System (16 July 2009). "Recommendations of the Special Commission on the Health Care Payment System" (PDF). Retrieved 2010-03-11.
  40. 1 2 3 Henry J. Kaiser Family Foundation (24 February 2010). "Side-by-side comparison of major health care reform proposals" (PDF). Menlo Park, CA: Henry J. Kaiser Family Foundation. Retrieved 2010-03-13.
  41. Bundled Payments – Medicare Pilot Program. Health Reform GPS: a Joint Project of the George Washington University and the Robert Wood Johnson Foundation. http://healthreformgps.org/resources/bundled-payments-%E2%80%93-medicare-pilot-program/.
  42. "Business Consult: CMS is Upping its Bet on Bundled Payments Deirdre Baggot, PhD, MBA, RN, Former Expert Reviewer, Bundled Payments for Care Improvement Initiative at CMS Former Lead, CMS Acute Care Episode (ACE) Demonstration Principal, ECG Management Consultants". American College of Cardiology. June 1, 2016. Retrieved August 18, 2016.
  43. Deirdre Baggot; Andy Edeburn (October 1, 2015). "Mandated Bundled Payments Compel Hospitals to Rethink Post-Acute Care". Healthcare Financial Management: Journal Of The Healthcare Financial Management Association.
  44. Baggot, Deirdre; Manis, Tori (September 15, 2016). "CMS Targets Cardiovascular Care with New Mandatory Bundles". CardioSource World News. Retrieved October 26, 2016.
  45. Lisa Chow (November 27, 2013). "Hospital Puts Docs On the Spot to Lower Costs". NPR. Retrieved June 13, 2016.
  46. 1 2 3 4 Deirdre Baggot (April 2011). "Bundled Payments Revisited: 10 New Critical Success Factors". GE Healthcare Camden Group. Retrieved June 13, 2016.
  47. Mechanic RE, Altman SH (2009). "Payment reform options: episode payment is a good place to start". Health Aff (Millwood). 28 (2): w262–71. doi:10.1377/hlthaff.28.2.w262. PMID 19174388.
  48. 1 2 Hussey PS, Eibner C, Ridgely MS, McGlynn EA (2009). "Controlling U.S. health care spending--separating promising from unpromising approaches". N Engl J Med. 361 (22): 2109–11. doi:10.1056/NEJMp0910315. PMID 19907037.
  49. 1 2 3 RAND COMPARE (Comprehensive Assessment of Reform Efforts). "Overview of bundled payment". RAND Corporation. Retrieved 2010-03-13.
  50. "Bundled Payments: What Physicians Need to Know" Shelly K. Schwartz, Physicians Practice, November 2012.
  51. "Taming Payment and Delivery Model Monsters" Sheri Porter, AAFP News, September 2012.
  52. "Bundled Payments". www.ama-assn.org. Retrieved 2016-09-29.
  53. "Bundling payment for episodes of care: Balancing the financial risk of health care" (PDF). 3M Health Information Systems.
  54. Robinson JC, Williams T, Yanagihara D (2009). "Measurement of and reward for efficiency in California's pay-for-performance program. How the Integrated Healthcare Association discovered the problems of using 'episodes of care' as the basis for physician performance rewards". Health Aff (Millwood). 28 (5): 1438–47. doi:10.1377/hlthaff.28.5.1438. PMID 19738261.
  55. 1 2 Robinow A (February 2010). "The potential of global payment: insights from the field" (PDF). Washington, DC: The Commonwealth Fund. Retrieved 2010-03-13.
  56. 1 2 Guterman S, Davis K, Schoenbaum S, Shih A (2009). "Using Medicare payment policy to transform the health system: a framework for improving performance". Health Aff (Millwood). 28 (2): w238–50. doi:10.1377/hlthaff.28.2.w238. PMID 19174386.
  57. Deirdre Baggot (July 7, 2014). "The Bundled Payment Title Wave: Recap and Insight from the Fourth National Bundled Payment Summit". Oregon Healthcare News. Retrieved June 13, 2016.

External links

This article is issued from Wikipedia - version of the 11/10/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.