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Prehabilitation Lowers Episode Costs Under Bundled Payment Models

Engaging patients in a prehabilitation program can reduce episode costs by over $1,200 for providers participating in bundled payment models.

Prehabilitation and bundled payment models

Source: Thinkstock

By Jacqueline LaPointe

- Dedicating even a couple hours to helping patients understand and prepare for a procedure prior to surgery can save providers millions under bundled payment models, explained healthcare industry expert and former CMS official Charlene Frizzera.

Bundled payment models traditionally pay providers a fixed amount for a triggering event, such as a joint replacement surgery, and a specified amount of post-acute care time, usually ranging from 30 to 90 days.

The inclusion of post-acute care time to the alternative payment model has providers fixated on ensuring their bundled payment patients recover safely after a surgery. From discharging to the most appropriate post-acute care setting to following up with patients shortly after discharge, post-acute care optimization has been a leading strategy for bundled payment model success.

But doing some of that work before a patient undergoes a triggering event could also result in lower post-acute care and episode costs, stated the former CMS Acting Administrator and Chief Operating Officer and current President of CF Health Advisors and advisor for PeerWell, a health IT company offering PreHab and ReHab apps. That work is called prehabilitation.

“Bundled payments really did not include prehabilitation in terms of how the payment was supposed to work,” Frizzera recently told RevCycleIntelligence.com. “But what's interesting is prehabilitation actually became the way that you saved money with post-discharge services.”

READ MORE: Key Strategies for Succeeding with Healthcare Bundled Payments

She explained that a prehabilitation program that focuses on educating and preparing patients for surgery is key to bundled payment success.

“It's a process before the surgery that takes you through the whole pre-surgery process through the surgery process, explaining to you what's going to happen in surgery and what happens in post-habilitation,” she said. “Providers develop a program before you actually have the surgery that a patient can follow and puts them in the best possible physical and mental condition to have surgery.”

Charlene Frizzera, CF Health Advisors President and former CMS official, discusses how prehabilitation reduces episode costs under bundled payment models.
Charlene Frizzera, CF Health Advisors President and former CMS official

“What the surgeons did was say to a patient that if you don't do these things, your surgery will not be successful,” she continued. “Instead of telling the patient you have to lose weight or you shouldn't smoke, but then doing the surgery anyway because you can't change people, they actually said your surgery won't be successful unless.”

Under a prehabilitation program, surgeons and other providers explain to patients the keys to a successful surgery, such as exercises and diet regimens that can improve a patient’s chances of successfully undergoing and recovering from that procedure.

READ MORE: Patient Engagement Critical to Bundled Payment Model Success

“Once a physician tells a patient that their surgery won't be successful unless, patients were eager to find out what do they need to do,” she stated. “And that's where the prehabilitation has really come in. It wasn’t just out of somebody sitting back saying how can we make a lot of money off joint replacements, it was really how can I have a successful surgery.”

Spending just one to two hours on engaging patients with prehabilitation activities can reduce episode costs by $1,215. For a hospital with 1,000 cases per episode, the savings can reach up to $1.2 million, according to data from PeerWell's PreHab platform.*

The other component of a prehabilitation program is developing and discussing a post-discharge plan. Providers explain what the process is after the surgery and steps patients should take to ensure a safe, effective recovery.

By discussing post-discharge expectations and plans with patients prior to surgery, bundled payment providers can improve the percentage of patients being discharged to their homes, rather than costly skilled nursing facilities.

A one percent improvement in the percentage of patients going home after surgery can save a hospital about $100,000, PeerWell's data showed.

READ MORE: Bundled Payment Models Here to Stay Despite CMS Program Delays

“What's so interesting about this is the patient still gets the same payment, but because they have less surgery time, fewer surgery complications, and less post-discharge costs, providers actually make money,” Frizzera said. “The prehabilitation has done such a good job of getting them better sooner that the surgery is shorter and more successful. In the end, the cost is much lower for the actual surgery and, in most cases, the posthabilitation costs are much lower than they have been had the providers done nothing before the surgery.”

Prehabilitation also leads to bundled payment success by increasing patient engagement, she added.

“It's important in this whole habilitation space, whether its pre or post, that the patient is engaged more than the physician,” she said. “Usually it's the physician engaging more and taking more control.”

Encouraging patients to take control of a care episode can mean the difference between a minor surgical complication turning into a hospital admission after an emergency room visit when the patient could have just contacted his surgeon or primary care provider for advice or a follow-up visit.

Patient engagement in the prehabilitation process gives patients the tools to understand the entire care episode and how to respond to potential challenges.

Using prehabilitation practices as bundled payment models evolve

While prehabilitation programs are crucial to realizing savings under bundled payment models, the alternative payment model market has recently experienced significant changes.

In November 2017, CMS canceled two mandatory bundled payment models slated to launch in 2018. The federal agency also reduced the scope of the Comprehensive Care for Joint Replacement (CJR) bundled payment initiative from 67 mandatory areas to 34 areas. The CJR initiative became voluntary in the 33 other regions.

CMS Administrator Seema Verma stated that the federal agency intends to refocus their Medicare bundled payment efforts on more voluntary demonstrations.

But providers questioned the future of bundled payments following the elimination of two models that also qualified as Advanced Alternative Payment Models (Advanced APMs) under MACRA.

“There's no doubt that there are ups and downs and there is speculation about what's going to happen with CMS getting rid of bundles,” stated Frizzera. “But they didn't. All they did was say we're not going to make them mandatory. We're going to make them voluntary.”

“People drew the conclusion that since they weren't doing bundles, ACOs and some of those value-based programs created under the last administration probably would not continue,” she continued. “That's also proven not to be true. And Alex Azar, who is the new HHS Secretary, clearly says value-based is here to stay.”

In fact, CMS announced a new voluntary bundled payment initiative in early 2018. The Bundled Payments for Care Improvement Advanced (BPCI Advanced) model builds on the BPCI initiative by offering providers additional financial risk, qualifying the new iteration as an Advanced APM.

The BCPI Advanced also includes three outpatient episodes.

“What they're really trying to do is encourage hospital systems to work with other providers,” Frizzera explained. “Secondly, what they're trying to do is ensure people who really need to be in a hospital are in the hospital.”

Whether providers elect to take on inpatient or outpatient procedures though, prehabilitation will still be key to reducing costs per episode.

“The key to this product is engaging beneficiaries with doing something different,” she said. “So, it doesn't matter what the service is or really where the setting is. Anytime you can engage the patient to actively try to get healthier and improve their health it's going to impact any setting.”

Prehabilitation will also be a major driver for bundled payment model development and adoption, even outside of Medicare, Frizzera added.

“There are physicians that actually see the value in this for the patient and are doing it even if there is not a mandatory program,” she remarked. “The market itself will set itself up for these kind of programs as competition in the marketplace happens.”

“For example, if patients talk about this prehab program and their success, other individuals may say, ‘What are you talking about? I didn't get any of that service.’ Then, they'll ask who they went to,” she continued. “The whole healthcare delivery system, especially in this bundled space, will probably compete itself into better service eventually.”

The bundled payment model is here to stay despite recent shifts in Medicare strategy and especially as providers engage in better care delivery through prehabilitation. Providers should continue to prepare for bundled payments, while keeping an eye on the next evolution of the model and value-based reimbursement in general, Frizzera warned.

CMS added greater financial risk levels to the most recent bundled payment model and other alternative payment models are likely to follow a similar path.

“Bundles are easy for people to understand and it's pretty easy to see how they work, but I would say at-risk payment is what you need to look for because that's what the future of healthcare is going to be,” she stated.

But developing a prehabilitation program can help providers take on those advanced at-risk payment models.

*Updated to include data source.

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