How to Address Bundled Payment Cost Reduction Challenges
By - As per the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) will begin applying a value-based payment program under the physician fee schedule within the year in association with budget neutrality.
This November, CMS is hosting a conference to discuss plans to shift half of Medicare payments to value-based models within the next 3 years. CMS allows physicians and medical practice groups to garner more information about their resource use and cost algorithms related to care quality as per the ACA, as RevCycleIntelligence.com reported.
Medicare will transition into a bundled payment model for hip and knee replacements. CMS plans to require hospitals in 75 geographic areas to participate in a test of bundled payments for these hip and knee replacements.
Andre Blom, Director of Rehabilitation at the Illinois Bone & Joint Institute, spoke with RevCycleIntelligence.com highlighting hospitals’ lack of preparation for CMS’s Bundled Payments for Care Improvement Initiative when facilitating successful bundled payments.
RevCycleIntelligence.com: What hurdles or challenges do you anticipate as CMS’s plan to transition half of Medicare payments to value-based models by 2018 develops?
Andre Blom: The number one issue with regard to risk-adjustment pricing is data. Is it accurate, and is it up-to-date? If healthcare providers have timely, reliable data, the Bundled Payments initiative presents a great opportunity to reduce costs, decrease readmissions, and enhance patient care. But if the data isn’t trustworthy, the benefits of the program will elude them. They will need to fix the infrastructure that has failed to provide accurate, actionable information. Another issue is the timing of the data. If hospital administrators are working with retrospective information, if their data is two years old, it’s irrelevant today.
RevCycleIntelligence.com: How can hospital executives increase preparation efforts?
Blom: In the continuum of care, the likelihood that all patients are getting all services in one system is zero. All kinds of factors account for this, geography for example. A patient treated in hospital receives additional care outside of the hospital. So, hospital executives must look at the scope of their health system and evaluate the factors that can help them execute the program and try to determine the blind spots, those factors over which they don’t have control.
Where does my influence end? At what point will risk increase exponentially? Answers to these questions will determine whether organizations are going to have to make massive capital investments to make their systems work or if they are going to have to strategically align. CMS recognizes these are core issues, which is why it is promoting the idea that hospital execs partner or align with experts who may be outside of their network in order to be successful.
RevCycleIntelligence.com: What are your general thoughts on value-based care initiatives and their effectiveness?
Blom: Healthcare is changing into a retail environment. With high deductible plans, healthcare providers are realizing the need to view patients as collaborators in value based care initiatives and redesign. The paradigm shift to value-based care is forcing people to start talking to one another about what’s going on, which is new. They are communicating inside and outside of their system because they recognize they need to be able to take care of the whole patient. They can’t just think fee-for-service. In fact, healthcare organizations should view this CMS directive as an opportunity to pilot a care redesign in a value-based payment model.
RevCycleIntelligence.com: Define the role of interoperability within the revenue cycle space.
Blom: Interoperability is the interface in the revenue cycle that is essential to the management of risk across episodes. Each episode has costs. If your dashboard doesn’t reveal accurate data right away, you are at the mercy of year-end results and you will more than likely have to devote the following year to making fixes to your infrastructure. A dashboard with accurate, up to the minute data will affirm the reconciliation data from CMS once it’s received.
Furthermore, with interoperability, you can bring physicians into the program, monitoring touch points of analytics that ultimately drive results. This is a new world for physicians. Physician engagement is important, but you need executive support to help with analytics and data.
RevCycleIntelligence.com: How do you expect hospitals to fare with the upcoming bundled payment testing?
Blom: What we have experienced with CMS in the last 18 months in terms of the revenue cycle in a risk adjusted program like bundled payments is a disconnect between the initial investment and an uncertain return on investment. The early adopters now have an understanding of cost benefit ratios in revenue cycle management. For example, we now know a positive net result isn’t going to occur quarterly. That makes it a little bit harder because hospitals are being asked to invest extensively on the front end with a questionable ROI on the back end.
To be successful in bundled payments requires an ability to manage the post-acute realm. While the hospital systems may be experts in the acute realm, it’s difficult to exert that level of control and awareness completely. Those in rural environments have to look outside of their own four walls to get some help facilitating partner communications or partner networks to be successful.
Care coordination technology solutions are being effectively used to connect and unite each patient episode with the entire acute and post-acute network. Executives can track their risk bearing entities on a weekly or daily basis and how they are functioning, comparing expectations of outcome relative to value outcome. It becomes much easier to invest $10 if you know you’re going to receive $100 on the back end. Without real-time, accurate data, hospitals will be investing $10 with no idea how you are going to do on the back end.
In the medical community there is general acceptance that bundled payments are absolutely the way of the future. There is a general sense that it represents a better way to practice medicine. If hospital executives can get over an initial response of negativity or the questioning of the change in their world, they will drive change and help realize real healthcare reform.
