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Better benchmark data accelerates move to payment for episodes of care


Robin Gelburd asks and answers in FierceHealth Payer why it has taken payment for episodes of care (aka bundled payments) so long to catch on and why it is  catching on  now. Among her remarks:

 “One reason has been a lack of sufficiently robust benchmark data and sophisticated analytics to determine how much a typical episode of a given procedure or condition currently costs, and how much it could cost if it were optimized by eliminating duplicative services or preventing potentially avoidable complications. {But} such tools are now becoming available….”

“To provide a clear view of what the market is currently paying for episodes, benchmark data about per-episode healthcare costs require several characteristics. They must:

  • “Include both billed charges and allowed amounts
  • “Be available on a national scale or specific to a geographic area
  • “Be adjusted for risk factors and co-morbidities”

“Benchmark data with those characteristics are now reaching the market. Such data make it possible for payers contemplating a move toward value-based reimbursement and conducting related pricing studies to evaluate episodes. And such data also can inform negotiations between plans and providers, thereby helping to build and maintain networks.”

“W}hen the data includes both the total episode pricing and separate line items for the individual procedures that make up the episode, such information can allow providers to compare their own performance and pricing at the procedure level to that of the market in their region. Thus, episodes can benefit providers, helping them to improve budgeting and achieve efficiencies, as well as better negotiate with payers.”

“Seeing how individual professionals and facilities fit into the episode as a whole may stimulate the formation of partnerships and better coordination of care. Benchmark data can also help consultants advise payers and healthcare systems.”

“In addition to episode benchmark data, episode analytics are available that can enable payers to analyze their own episodes. Organizations can examine their episodes to see, for example, when and why actual episode costs exceeded expected costs, and which specific providers were associated with higher or lower levels of potentially avoidable complications. That information can aid in building networks, educating providers, improving the quality and efficiency of care and budgeting.”

“By using benchmark data together with episode analytics, organizations can compare their own episode results to those of the larger marketplace and identify areas of both improvement and opportunity.”

To read more, please hit this link.


3 healthcare changes that can outlast the ACA

Whatever the Republican efforts to kill the Affordable Care Act, some healthcare changes encouraged by the ACA that have particularly developed over the past few years will almost certainly continue, predicts The New York Times.

Three of them are:

  • Early intervention through much expanded community-health efforts that address the social determinants of health.
  • Alternative payment models, such as bundled payments, in a continued move away from fee for service and to fee for value and outcomes.
  • More emphasis on care coordination and team-based care, including better coordination between clinicians and outside social services.

To read The New York Times piece, please hit this link.

Study: Bundled-payment system for joint replacements cut cost by 20%


A study in the Journal of the American Medical Association found that bundled payments for joint replacements  can cut costs by up to 20.8 percent without hurting patients’ medical outcomes.

Researchers used Medicare claims to analyze 3,924 lower-extremity-joint replacement procedures at San Antonio-based Baptist Health System between July 2008 and June 2015. The patients took part in CMS’s voluntary Acute Care Episodes and Bundled Payments for Care Improvement demonstration projects.Among the findings:

  • The system achieved on average $5,577 in savings per joint-replacement episode.
  • During a seven-year period, Baptist Health System cut average Medicare costs by 20.8 percent for 3,738 joint replacements without complications.
  • For 204 episodes with complications, Medicare episode outlays fell an average 13.8 percent.
  • Episodes that required prolonged lengths of stay fell 67 percent.
  • Study researchers projected that if every hospital used the Baptist bundled-payment model, Medicare could save $2 billion a year.

For the study, researchers used Medicare claims to analyze 3,924 lower-extremity-joint-replacement procedures at San Antonio-based Baptist Health System between July 2008 and June 2015. The patients participated in CMS’s voluntary Acute Care Episodes and Bundled Payments for Care Improvement demonstration projects.

To read the JAMA article, please hit this link.

Trump’s HHS pick dislikes Medicare bundles program



Kaiser Health News

A recent change in how Medicare pays for joint replacements is saving millions of dollars annually — and could save billions — without impacting patient care, a new study has found. But the man whom Donald Trump has picked to be the secretary of  the Department of Health and Human Services has vocally opposed the new mandatory payment program and is likely to revoke it.

Under the new program, Medicare effectively agrees to pay hospitals a set fee — a bundled payment — for all care related to hip- or knee-replacement surgery, from the time of the surgery until 90 days after. Traditionally hospitals collect payments for many components of care and rehabilitation individually.

Tom Price, M.D., the president elect’s HHS nominee, a congressman from Georgia and a very affluent orthopedic surgeon, has actively opposed the idea of mandating bundled payments for these orthopedic operations, calling it “experimenting with Americans’ health,” in a letter to the Medicare agency just last September. In addition, the agency which designed and implemented the experiment, the Center for Medicare and Medicaid Innovation, was created by the Affordable Care Act to devise new methods for encouraging cost-effective care. It will disappear if the act is repealed, as President-elect Trump has promised to do.

The study appeared Jan. 3 in the Journal of the American Medical Association. Though one of its authors is Ezekiel Emanuel, M.D., a professor at the University of Pennsylvania who helped design the ACA, the research relies on Medicare claims data from 2008 through mid-2015, long before the presidential election.

Starting in April 2016, CMS required around 800 hospitals in 67 cities to use the bundled payment model for joint replacements and 90 days of care after the surgery as part of the Comprehensive Care for Joint Replacement program. The program had previously been road-tested on a smaller number of hospitals on a voluntary basis, which formed the focus of the research.

The study found that hospitals saved an average of 8 percent under the program, and some saved much more. Price has been skeptical that bundled payments did save money, but the researchers estimate that if every hospital used this model, it would save Medicare $2 billion annually.

The bundled payment program works like this: For some specific kinds of medical procedures, including joint replacements or some heart surgeries, the Centers for Medicare & Medicaid Services will add up the costs for the entire episode, from the hospital stay and medical supplies to the rehabilitation afterwards. If the total costs are below a target set by CMS, the hospital gets to keep the savings. If not, the hospital has to pay Medicare the difference. It’s supposed to incentivize more efficient spending and better care coordination between providers, so they can lower costs.

In practice, it seems to be working. Baptist Health System, a network of five hospitals in San Antonio, saved an average of $5,577 on each joint replacement without sacrificing the quality of care, according to the study. Baptist was an early adopter of bundled payments; it began experimenting with them in 2008. Over seven years, the hospital system has cut Medicare’s costs on knee replacements by almost 21 percent.

The savings came without impacting quality. Patients at Baptist Health System were just as likely to be readmitted to the hospital or end up in the emergency room as patients nationally. There was some indication that quality of care may be better, fewer patients under bundled payments had long, extended hospital stays.

In Price’s letter from September, he said that Medicare had exceeded its powers in imposing such bundled payments, which he said took decisions out of the hands of doctors and patients.

That doesn’t seem to be the case, according to Amol Navathe, M.D., an assistant professor of medicine and health policy at the University of Pennsylvania, and one of the authors of the JAMA study. Instead, Navathe and his colleagues suggest that the bundled payments actually fostered greater collaboration between surgeons, administrators and patients because programs could only succeed in saving money if physicians were engaged in creating standardized pathways for care.

For example, the Baptist Health System saved about 30 percent on implant costs, around $2,000 on each artificial joint, by using the least expensive medically equivalent implants as determined by the hospitals’ surgeons.

Usually, physicians are prevented from benefitting when hospitals save money because of anti-kickback laws. Waivers under bundled-payment models mean that surgeons can put in the time to find the best, most cost-effective implants, and share in some of that savings.

“It takes that extra level of effort and coordination, and proactively communicate with [patients],” Navathe said. “Preplanning, setting of expectations and communicating up-front is resource intensive, when they have the incentive to do that they were willing to expend the extra resources to make that happen.”

When bundles included care after a patient’s hospital stay, spending on rehabilitation went down 54 percent. That’s because hospitals took the time to match patients to the right level of care, Navathe said.

Patients who didn’t need to stay in a nursing home or rehab center were set up with home health care or physical therapy.

Price has objected to CMS making bundled payments mandatory, calling it an instance of federal overreach. But bundled payments only work if everyone has to participate, according to Darshak Sanghavi, M.D., the former director of prevention and population health at the Center for Medicare and Medicaid Innovation.

If hospitals can choose whether or not to participate, only the ones that are already delivering care efficiently –and coming in under CMS’s cost target — will use bundles and Medicare will constantly be paying out bonuses. The system needs to be mandatory, Sanghavi said, to pull in less efficient hospitals and give them incentive to change.

“Stopping the programs for ideological reasons I think impedes innovation in a way that is going to consign us to having really, really high costs of care that’s going to continue in the future,” Sanghavi said.

Bundled payments aren’t just for hip and knee replacements. On Dec. 20, CMS announced it would expand mandatory bundled payments to treatments for heart attacks, bypass surgery and cardiac rehab beginning in July 2017. In its waning days, the Obama administration is effectively throwing down the gauntlet to the incoming administration on bundled payments, one of its signature reforms.

How physicians should change thinking to deal with bundled payments

For bundled-payment systems, physicians need to change the way they think, says an article in NEJM Catalyst. Among the recommendations:

“Assume leadership of the ‘next site of care’ decision during hospital discharge planning.”

“Physicians can no longer default to the discharge team — case managers, physical therapists, nurses, and social workers — when deciding on the next site of care. Instead, physicians will be called upon to be the team leader as next site of care planning is carried out. This involves understanding the patient needs that determine the most appropriate next site of care and grasping the differing capabilities of home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term acute care hospitals (LTACs).”

“Ensure that patients are mobilized early and often.”

”Regardless of a patient’s principle diagnosis and co-morbid illnesses, functional status has a major impact on recovery. During hospitalization, patients remain in bed too often, as the staff focuses on delivering medications and other treatments. The deleterious effects of immobility are well documented. Bundled payment models provide new incentives to avoid keeping patients in bed needlessly, as immobility and deconditioning increases the chances for facility-based care after discharge.”

”Ensure that patients’ goals of care are elicited, and when appropriate, palliative or hospice care is delivered.”

”Physicians must have the conversational skills to draw out patients’ goals of care, especially where advanced or severe chronic illness is involved. Patients are often relieved when their physician brings up the matter of care goals. In some cases, onerous interventions like hospitalization, emergency room visits, or procedures may be avoided in keeping with a patient’s wishes.”

To read the whole piece, please hit this link.

10 things about CMS bundled-payment rule


Becker’s Hospital Review has done a handy 10 things to know about CMS’s final rule on a mandatory bundled-payment program for coronary-artery-bypass surgery and its expansion of the existing Comprehensive Care for Joint Replacement program. To read whole article, please hit this link.

Here they are, stripped down:

1. “Under the final rule, acute care hospitals in certain markets will be accountable for the cost and quality of care provided to heart attack, coronary bypass and surgical hip and femur fracture patients beginning with hospitalization and extending 90 days after discharge.”

2. “The rule expands the existing CJR model to include additional surgical treatments for hip and femur fractures….”

3. “Hospitals will receive retrospective episode-based payments under the new bundles. Hospitals that spend less than the target price for the episode of care while meeting or exceeding quality standards keep the savings achieved. A hospital is required to repay Medicare if the costs exceed the target price.”

4. “The final rule includes a cardiac rehabilitation payment model, which will test whether a payment incentive can increase the utilization of cardiac rehabilitative services….”

5. ”The heart attack and coronary bypass bundled payment model will be mandatory for hospitals in 98 metropolitan statistical areas….”

6. ”About 860 hospitals will participate in the hip- and femur- fracture bundles, which will be tested in the 67 MSAs already selected for the CJR model.”

7. ”The cardiac rehabilitation payment model will be implemented in 90 MSAs, 45 of which were not selected for the heart attack and coronary bypass models….”

8. ”The cardiac bundles and the expanded CJR model qualify as Advanced Alternative Payment Models under the Medicare Access and CHIP Reauthorization Act and the Quality Payment Program.”

9. ”The American Hospital Association said it was pleased with some parts of the final rule, including the flexibility the rule provides regarding MACRA participation. However, the AHA expressed concern about the pace of change. ‘The bundled payment model for cardiac care is the second mandatory demonstration project the agency has finalized in just the past 15 months,’ said the AHA. ‘This is too much, too soon.”‘

10. The bundles will begin July 1, 2017.

N.E. Baptist signs bundled-payment pact with GE for joint replacements




New England Baptist Hospital has become  a preferred provider for hip and knee replacements in a bundled-payment system for General Electric’s 100,000 employees nationwide.

This is the first such large employer partnership for Roxbury Crossing, Mass.-based New England Baptist but it’s the seventh  for GE, which has picked  six other preferred hospitals for joint care in other states.

GE, which recently moved its headquarters from Fairfield, Conn., to Boston, will directly contract with the hospital, which will  be paid via  bundled payments that cover care spanning 60 days.

Big employers are increasingly turning to bundled payments for procedures undergone by their employees in order to cut, and better forecast, costs and improve care.

GE will pay out-of-pocket costs and travel expenses for employees who opt to have surgery at the hospital.

If there are complications within the 60 days of the bundled- payment period, there will be no other charge to GE except for the bundled amount, Virginia Proestakes, GE’s program leader of health operations, told The Boston Globe.

To read The Globe’s story, please hit this link

Smooth care transitions a point of pride for this small R.I. hospital


South County Health, a small nonprofit system in bucolic southern Rhode Island, owes a large part of its success to its ability to manage transitions of care – an increasingly urgent imperative as healthcare moves from fee-for-service to value-based reimbursement.
The system’s flagship is South County Hospital, a 100-bed community hospital. The system also includes South County Home Health Services (a home health agency); South County Surgical Supply (home medical supplies); South County Medical Group, with 65 physicians and advanced-practice providers, and two Medical and Wellness Centers, one in Westerly and the other in East Greenwich, with urgent-care facilities and an array of primary-care and specialist physicians.

South County Hospital has long had very high marks for quality and patient satisfaction. Indeed, surveys have often called it the best hospital in its state and one of the best in New England. It was recently awarded a five-star rating by the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), putting it in the top 2 percent of those surveyed nationwide.

Louis R. Giancola, the system’s president and chief executive, attributes much of the hospital’s success in patient satisfaction — and fiscal stability — to the strong engagement of its staff, which “we keep in the know’’; a “supportive board’’; the long-term loyalty of people in the service area, and the “nimbleness of a community hospital’’. Having a relatively affluent market with many well-insured people hasn’t hurt either, he acknowledged.


Mr. Giancola.

A particular point of pride is: “We’re good at transitions of care. Maybe that’s a result of our being small.’’

South County Hospital, like virtually all health systems these days, faces many challenges in dealing with the rewards and penalties involved in the forced-march transition to value-based reimbursement. Mr. Giancola notes:

“Medicare incents us to improve patient satisfaction, reduce hospital infections and avoid various patient injuries.  Most commercial payers (insurers) have followed suit. I believe the threat of reduced payments has focused our attention on these measures even though we sometimes complain that the measures are not always fair.’’ (See below.)’’
“It’s all about blocking and tackling. The biggest issue is readmissions within 30 days. {South County has long had lower readmission rates than most hospitals.} We’ve really focused on managing the transition from the hospital to another level of care. The important element is good communication between the hospital providers and the skilled-nursing facility, home health and the doctors caring for the patients in the community.’’

Part of South County’s recognized success in overseeing clinically successful and financially efficient transitions – and, in so doing, reducing costly readmissions — has been its emphasis on using, when possible, home health care instead of nursing centers to save money and improve care, Mr. Giancola said.

The Centers for Medicare & Medicaid Services and other regulators and payers have been pushing hard for better patient-care management, especially since the Affordable Care Act took full effect. Much of South County Health’s work in this area involves helping primary-care physicians to be better traffic managers of their patients’ care.

Another transition success story he cites is medication reconciliation. “Often patients are confused about their drugs and that can lead to readmission because they take drugs that are contra-indicated or they take two meds designed to address the same problem. We’ve hired pharmacists that review meds in the hospital to ensure they are reconciled and the patients get clear advice on discharge.’’

He notes as an example of what might sometimes be unfair pressure from the Feds: CMS’s making hospitals put many patients who have to stay in the hospital for a night or two into “observation’’ status instead of as inpatients, thus slashing potential hospital reimbursement.

Bundled payments, Medicaid and an ACO

An increasingly important strategy for controlling costs and improving care is bundled payments.

South County Health participates in a bundled-payment program for joint-replacement patients with Blue Cross for their Medicare Advantage and commercial-insurance members. (Cambridge Management Group has been doing a lot of work in bundled-payment programs and so this particularly caught our eyes.)

With older-than-average market demographics, the joint-replacement business is a major contributor to the system’s bottom line. (However, while the system is financially stable, its operating margin is only about 2 percent; the system is closely managed.)

Mr. Giancola said that, as with many things in the brave new world of value-based medicine, it’s unclear what sort of savings may come out of the move to bundled payments. However, he thinks that the clinical benefits are clear:

“The bundling process helps us to get a better handle on the clinical process. Having to report quality throughout the entire episode of care makes for better transitions and final outcomes.’’

South County Hospital’s leaders are happy that the Affordable Care Act has put so many uninsured people into Medicaid. While Medicaid reimbursements lag those of Medicare it’s a lot better than no insurance for low-income people. Many of those people, of course, have long used the emergency room as their major source of “free’’ (to them) medical care.

But, perhaps surprisingly, Mr. Giancola told us, Medicaid expansion has not yet cut the flow of people into South County Hospital’s ER, despite efforts encouraged by public and private insurers to promote more and better preventive care to keep people out of the ER. “ERs are too handy for lots of people,’’ he observed.

South County Hospital has had to deal with many other changes, whose long-term fiscal effects are difficult to predict. One is the rising number of employed physicians, hired, Mr. Giancola says, to ensure that the hospital can maintain the range of services that patients want and need in an acute-care facility, such as obstetrics.

Mr. Giancola notes that’s expensive. “Hiring doctors away from private practices to be based in the hospital puts them in more expensive places, with expensive support staffs, equipment and technology. The jury is out on whether the increase in hospital-employed physicians will save money in the long run.’’

Also unknowable at this point is whether South County’s participation in an Accountable Care Organization with Blue Cross & Blue Shield of Rhode Island (BCBSRI) and Integra Community Care Network will ultimately save money. Integra is a partnership of Care New England Health System and its network physicians, Rhode Island Primary Care Physicians Corporation and South County Health and its network physicians. Focused on population-health management, the ACO provides incentives for Integra’s providers to proactively manage patient health, with a heavy emphasis on prevention of illness, while trying to restrain costs.

South County Health, as befits a, well, beloved local institution is big on promoting community-wide collaboration of institutions that can help improve not just healthcare in a clinical sense, but population health.

Toward that end, it has brought together such diverse agencies as the YMCA, the five Federally Qualified Health Centers in its area, school systems, the local Community Action Program and community members to harness the resources of the community. Whatever happens to the ACA, the move toward community and population health will continue, and South County Health will help lead it in southern Rhode Island.

Mr. Giancola has written: “Our long-term goal is to inspire the broader community to see health as a community issue and to mobilize government, schools, businesses and citizens at large to rally around efforts to ensure a healthy community.’’

Dearth of data on bundled payment effects

A Modern Healthcare news analysis finds a dearth of data on the effects of bundled-payment models on  costs and  healthcare quality, a challenge emphasized by the latest government report on Medicare’s voluntary Bundled Payments for Care Improvement (BPCI) initiative.

“In one clinical episode—orthopedic surgery—setting a flat price for all of the care delivered during the episode of care appeared to reduce costs and improve patient outcomes. But for others, there simply wasn’t enough evidence to declare the bundle a success or failure,” the news service concluded.

“It’s hard to draw conclusions either way from this report,” said Dr. Chad Ellimoottil, an assistant professor at the University of Michigan whose research focuses on alternative payment models, including bundled payments.

“The results to me just reinforce what we already know,” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute, a not-for-profit organization that studies and promotes value-based payment models. “For some of these episodes, like joint replacement, it works fine,” he told Modern Healthcare. “Everything depends on the episode or the condition or the illness you’re looking at.”

Modern Healthcare said that Mr.  de Brantes “was less sanguine about the administration’s full-steam-ahead approach. He questioned several aspects of its bundle design, including that the episodes are triggered by hospitalization rather than encompassing the management of a condition. He also criticized the lack of adjustment for patient severity.”

“Could it be a lot more definitive and improved over time? Of course,” de Brantes said of Medicare’s bundled-payment models. “It’s up to the government to really come to grips with how to design this the right way and how to implement it the right way.”

But Mark Fendrick, a professor at the University of Michigan and director of its Center for Value-Based Insurance Design, said: “The BPCI evaluation adds to the growing body of research that changing provider incentives away from a volume-driven model can produce modest savings without compromising quality of care.”

To read the Modern Healthcare analysis, please hit this link.



In the EHR age, clinician-to-clinician questioning remains essential


“The Conversation (circa 1935), by Arnold Lakhovsky,Marla Durben Hirsch writes in a FierceHealthcare piece that despite all the hoopla about electronic health records and the general digital delirium we’re all in, there’s no substitute for clinicians to have real conversations with each other and patients. With such new advances as bundled payments, this will remain just as important as it has always been.

As an example of the EHR benefits she cited, regarding a Vanderbilt University study:

“The researchers compared a typical process map for a high-risk situation (discharge from a cardiac unit) to the information in an EHR and discovered that the EHR provided more detailed information than the regular process map. For instance, it provided information from sub-processes, such as EHR notes, orders and forms, and identified 12 additional provider types involved in the cardiac unit. Moreover, 35 percent of providers involved in care on the unit were ‘unexpected’ in the process. All of this additional input into the analysis would be helpful in the quality improvement activities and ultimate patient safety efforts.”

She added: “We’ve known for years that the data in EHRs can be used for a multitude of secondary uses, such as research into identifying at-risk patients, determining who would be well suited to participate in clinical trials and the like.

“These new studies point to even more opportunities to harness EHR data in new ways to improve clinical care and patient safety.”

“But why did it take an EHR to unearth some of this information? Why did it take an EHR to determine that there are more providers involved in discharging patients from an inpatient cardio unit than first expected? Why did it take an EHR to uncover that the same providers, whether by specialty, personal relationships, or being scheduled in a hospital at the same time, end up informally working together to coordinate care?”

“Why not simply ask?

  • ‘Hey, are there any other staff members that we should include in our analysis of risks on this cardio unit?’
  • ‘How did that provider end up providing care here?’
  • ‘Are there particular clinicians you seem to end up working with regularly when coordinating care in our hospital? Should we designate the three of you a team to make patient care easier?”’

To read the report from  the Vanderbilt researchers, please hit this link.

To read Ms. Hirsch’s essay, please hit this link.


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