Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Bundled Hospital Care Payments: Remodeling a Broken System

By Jacqueline DiChiara

- The concept of bundled hospital care payments — a singular (bundled) payment generated from hospitals, physicians, and post-acute care providers for services rendered from a specific care episode — has been under close microscopic review and analysis. An active push for its reform is underway.

Bundled Hospital Care Payments

Bundled payments and post-acute care require pressing assessment and education, says the American Hospital Association (AHA) in a recent statement before the Health Subcommittee of the Committee on Energy and Commerce of the House of Representatives.

The primary objective of AHA’s statement was to provide input on the Bundling Coordination Post-Acute Care (BACPAC) Act of 2015. BACPAC’s initiative is to bundle payments for post-acute care services provided within 90 days after a hospital discharge.

Under the Affordable Care Act, Medicare payment bundles were enacted via the Bundled Payments for Care Improvement (BPCI) initiative.

Healthcare providers are financially encouraged to utilize bundled payments to use economically advantageous care when appropriate and to reduce both internal hospital costs and post-hospital costs so savings with providers can be shared via gainsharing, says the AHA.

READ MORE: AHA: Post-Acute Care Medicare Reimbursement Reform Needs Time

A variety of factors determine what a particular payment amount is based on an individualized collective calculation. This payment amount is determined by the patient’s age, general level of health, and the specific condition requiring treatment, confirms the AHA.

A broken payment system requires mending

Payment bundling as currently implemented within the healthcare system needs a drastic makeover, says the AHA, particularly in the areas of patient experience, population health, and per-capita costs. The AHA advocates for the implementation of new payment and delivery models to advance and improve these facets of the healthcare industry.

Noticeable financial gaps require addressing, says AHA, confirming its members have been actively testing innovative payment models within the realm of both public and private sectors.

According to collected data, from 2020 to 2028, bundled payments would be set at 96 percent of what would have otherwise been paid, explains AHA. Therefore, bundled payments, adds AHA, are a complicated endeavor of which post-acute care is a valuable facet.

“Now is the time to dedicate resources toward building the knowledge base needed to improve our health care delivery system by testing new models on a small scale and using the lessons learned to develop proposals before considering widespread adoption and implementation,” confirms AHA’s statement.

Variation implies post-acute care discrepancy

AHA maintains a lack of care coordination in the fee-for-service system yields noteworthy variation in how patients receive post-acute care.

“The first care setting after discharge from a general acute-care hospital is a major driver of both the clinical pathway the patient will follow and the overall Medicare payment for that episode of care,” states AHA. “Thus, bundled payment arrangements present many opportunities to re-tool the types and mix of post-acute care, and materially improve patient care and lower costs. Such efforts may include more standardized hospital discharge practices and post-hospitalization protocols for medical, rehabilitation and other post-acute care services.”

Bundled payment arrangements pose many dilemmas, says AHA. There is risk involved when healthcare providers lacking the required available tools to comprehend and select post-acute services to achieve the most beneficial outcome that can be anticipated for a beneficiary’s long term wellbeing.

Ongoing efforts need to be readdressed and overhauled

The AHA’s primary concerns with the BACPAC bill “include its potential to preempt valuable work already undertaken in this area; its reliance on the ‘Continuity Assessment Record and Evaluation (CARE) Tool’ as a patient assessment instrument; and its inappropriate adjustment for readmissions,” says the organization, which confirms BACPAC could preempt ongoing work with bundled payment models.

The AHA advocates for the Centers for Medicare & Medicaid Services (CMS) to complete its already ongoing initiatives involving bundled payment under the BCPI initiative before committing to a specific bundled payment approach with post-acute care.

“Committing to a specific approach now could preempt BPCI’s results and preclude CMS from utilizing the lessons learned to create the best and most effective bundling models possible,” maintains AHA.

What policymakers should consider next

Bundled payments are implemented within the Medicare system via a sequential execution of operational issues that have yet to be actively considered by policymakers and providers, says an earlier AHA issue brief on Medicare payment bundling. Policymakers and providers need to consider the definitions of episodes of care, price points for bundled payments, and how to effectively manage care delivered within a bundled payment initiative, summarizes the AHA brief.

“In order to promote Medicare payment bundling as a more comprehensive population-based model, policymakers will need to design a complete framework that carefully considers the ways to define and price the bundles, with adequate safeguards to protect the quality of patient care and the financial stability of providers,” AHA’s brief additionally explains.

According to the AHA’s extensive analysis, there are over 8,800 different patient pathways demonstrated within a 60 day window following hospital discharge. There is also significant variation regarding the type volume of unique post-acute visits. Even when focusing on selected high-frequency conditions, over there are over 1,000 unique clinical pathways following discharge.

AHA subsequently adds healthcare providers must acknowledge and recognize how to effectively administer episode costs under a new payment system that has unique incentives compared to fee-for-service. Healthcare providers maintain responsibility for the costs and quality of services delivered by other providers even though such services are beyond their influence.

Advocating for physician autonomy

It is also time for the healthcare industry to reconsider bundled hospital care payments in terms of physicians’ imperatives, maintain Ateev Mehrota, MD, MPH, and Peter Hussey, PhD, in The Journal of the American Medical Association.

There needs to be an active initiative in place to reconsider bundling physicians into hospital payments, maintain Mehrota and Hussey, who state the inclusion of physicians in bundled payments could potentially yield “significant” economical and quality advantages.

“Expanding hospital bundled payments to include physicians has been on the policy horizon for 3 decades. Previous efforts were derailed by concerns about physician autonomy and other implementation barriers.”

This type of payment change “could remove unnecessary administrative and regulatory barriers, improve quality, and potentially provide greater freedom for individual hospitals and physicians to decide on the optimal way of delivering care,” Mehrota and Hussey add.

Too soon to commit, says AHA

The AHA confirms several elements of BACPAC are a step in the right direction for the healthcare industry. Regarding general concerns with the bill, AHA confirms the best option is for CMS to wait upon its commitment to one post-acute bundled payment approach.

AHA confirms the most optimal moment for testing and learning is now.


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