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Provider Communication Key for Success in Bundled Payments

Incorporating bundled payments in hip and knee replacement surgeries among Medicare beneficiaries would decrease medical costs by a 2 percent annual reduction.

By Vera Gruessner

- The Centers for Medicare & Medicaid Services (CMS) has established a number of different healthcare reimbursement strategies including pay-for-performance, alternative payment models, and bundled payments. For instance, the CMS Comprehensive Care for Joint Replacement program is set to begin on April 1, 2016.

Comprehensive Care for Joint Replacement Program

Bundled payments within joint replacement surgeries are thought to cut healthcare spending among Medicare beneficiaries. With CMS spending approximately $7 billion in hospitalizations due to joint replacement operations in 2014, it stands to reason that the bundled payments of the Comprehensive Care for Joint Replacement program should make an impact on minimizing expenses among hospitals.

Bundled payments are set up to handle reimbursement for a specific episode of care for each patient, which is in stark contrast to fee-for-service payment.

“The episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries. The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with the exception of certain exclusions,” CMS stated.

It is expected that incorporating bundled payments in hip and knee replacement surgeries among Medicare beneficiaries would decrease medical costs by a 2 percent annual reduction, which would save at least $700 million for the industry if these new payment models were implemented around the nation.

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To learn more about the Comprehensive Care for Joint Replacement program, spoke with Susan Nedza, MD, former Chief Medical Officer, of Region V for CMS and currently Senior Vice President of Clinical Outcomes at MPA Healthcare Solutions. What advice would you offer to healthcare providers preparing for the Comprehensive Care for Joint Replacement Program?

Susan Nedza: “I’d recommend that they focus on early communication between the various groups that are going to make them successful. That means the hospital, the post-acute care providers, and the physicians. They should develop a shared understanding of the goals as well as develop plans for how they’re going to manage cost across the episode. It’s really a supply chain exercise.” How can hospitals stay financially solvent and stable in the midst of bundled payment contracts and when providing care for patients with serious medical conditions?

Susan Nedza: That is the three trillion dollar question. The question is – how do you survive the transition from volume to value based reimbursement? The answer is that you’re going to have to live in both worlds.”

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“I recommend that the leadership of the hospital, the physicians and the post-acute care providers rapidly develop strategies, to manage acutely ill patients, to make their transitions more efficient, and to recognize that there are going to be significant product line stressors over the next two to three years.”

“CMS has rolled out its first bundled payment, which starts next week, and it won’t be the last. They’ve already begun to work with private payers on focusing on cardiac care as well as maternity care for the next bundled payment initiative.”

“I think what the hospitals have to recognize is that bundles are not just about Medicare but across private payers as well. They have to very quickly retool their services to provide not just care to the sickest patients.  As an emergency physician, I know that the sickest, are the easiest because you can predict what they’ll need, you can allocate resources, and you can develop highly efficient post-acute care strategies to manage their care.”

“Success will depend on managing cost and services for the other 60 or 70 percent of cases – where hospitals need to be able to predict what the needs are going to be for those populations and decide who needs what services.”

“The perfect example is intensive care coordination services – a hospital cannot afford and will not be able to afford to give the same level of high intensity care management in-hospital and post-hospital to every patient. It’s not financially viable. They have to recognize risk on the front end when they’re assessing patients for acute care services or elective surgery.”

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“Hospitals have to understand the risk for those patients who are likely to have poor outcomes and they’re going to have to allocate resources more precisely to mitigate risk based on that patient’s needs-not based on the fact that they’re simply undergoing a hip replacement.”

“My conclusion is that they should approach CJR and plan to redesign care across every product line. That means defining a new supply chain for services. Hospitals need to plan ahead to lose revenue beyond the CMS 2% reduction in CJR, because as they improve care, cases will shift to a lower paying DRG.  In addition, they need to understand which care redesign efforts impact efficient, effective care and which simply increase the cost of care. What should providers do to ensure their care coordination is effective when participating in the CMS Comprehensive Care for Joint Replacement Program?

Susan Nedza: “All providers, especially the ones who are responsible for the bundle, need to have a complete understanding of where the current gaps in communication are now. There are gaps between families and patients, families and hospitals as well as primary medical homes and hospitals.”

“Every single point in the supply chain of care needs to be evaluated for a new model for coordinating communication. This is not simply about technology. Some systems are investing in infrastructure to support the communication. If you don’t have a culture of communicating and a current process for communication, the infrastructure will not save you. The healthcare system is not going to be able to get a return on the investment, you will not see the utilization you expect, and care and costs won’t be impacted.”

However, it’s not an either/or – it’s a first and a second.” What data analytics processes and technologies should providers adopt when moving away from fee-for-service reimbursement and contracting through alternative, value-based payment models?

Susan Nedza: “The most important data analytics are going to support appropriate risk-adjustment models. It starts with assessing clinical and financial risk prior to the provision of care to determine the type of services necessary, the complications that may happen, and the outcomes you expect.”

“At the key transition point – transition from hospitalizations to post-acute care – the risk assessment for that particular patient needs to be re-evaluated to determine if they need an additional level of services because things happened that were unexpected.  The opposite is as important if they did better than expected, the hospital could choose to provide fewer resources to them in the post-acute care setting.”

“An example in the CJR program is a patient that the models predict is likely to need to go to a skilled nursing facility. Fortunately, the patient does very, very well. The hospital needs to be able to reassess the patient at the end and say, ‘You know what? She will do well with home health services instead.’ It’s better for the patient, there is less risk of infection, and more economical. .”

“However, if something happens that’s unexpected and their post-surgical outcome is worse, you need to be able to adjust those plans. Success will be defined by those who manage the clinical and financial risk at key decision points across the entire bundle.” 


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