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Mandatory bundled payments for certain orthopedic procedures in 75 MSAs
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how so?
im confused about bundling, but doesnt bundling entail an alternative to fee-for-service model, and be preferentially beneficial for providers in large organizations that can afford to "bundle" all expenses for each episode-of-care (one fee for all expenses for the condition)?
how would this affect "sight" of service?
im confused about bundling, but doesnt bundling entail an alternative to fee-for-service model, and be preferentially beneficial for providers in large organizations that can afford to "bundle" all expenses for each episode-of-care (one fee for all expenses for the condition)?
how would this affect "sight" of service?
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More details:
http://www.modernhealthcare.com/article/20150718/MAGAZINE/307189986
Bundling risk: New demo program shows CMS' eagerness to ditch fee for service
By Melanie Evans | July 18, 2015
The deteriorating hips and knees of the nation's seniors were an obvious target for Medicare's first mandatory test of an alternative payment model for hospitals. But joint replacement is not the only possible target, and hospitals are now on notice that Medicare will move ahead if they don't do it on their own.
Starting Jan. 1, nearly 800 hospitals in 75 markets across the country would be required under the proposal to accept bundled payments covering all services for hip and knee replacement procedures, starting with hospital admission and extending for 90 days. They either would have to lower their costs or absorb the losses, which will kick in after the first year of the five-year demonstration. The program is projected to save Medicare $153 million over its duration.
Experts described the mandatory bundling initiative as bold but not surprising. Rather, the announcement is the latest and clearest signal from the administration that the nation's hospitals and doctors increasingly will be paid under contracts that put them at risk for financial losses if they don't meet cost and quality targets.
“This should not come as a big shock to anyone,” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute.
That's because Obama administration officials in January pledged to move more than $100 billion in annual Medicare spending into new contracts that change how hospitals, doctors and others are paid no later than 2018.
The administration is seeking alternatives to traditional Medicare's fee-for-service system, which rewards volume rather than outcomes. The goal is to replace those volume incentives with rewards for more cost-effectively managing costs and outcomes.
Source: The Advisory Board Co.
The Affordable Care Act gave HHS' secretary authority, without congressional approval, to expand demonstrations of alternative payment and delivery models if they are shown to reduce spending growth without reducing quality, or if they improve patient care without boosting spending. So HHS can now roll out successful models throughout Medicare on a mandatory basis. Indeed, some experts have been urging the administration to roll out demonstrations that prove successful throughout Medicare as a way to strengthen the ACA's cost-saving and quality improvement results.
“We know that this will produce savings, so the hope is that it can be expanded on a mandatory basis nationwide within two years,” said Topher Spiro, vice president for health policy at the Center for American Progress.
The CMS' new proposal would bundle all care for joint replacement into one payment per patient, including the hospital stay and everything that follows for 90 days. Joint replacements cost Medicare $7 billion last year. But that amount does not include spending for care after patients leave the hospital, which varies widely and makes up nearly half of Medicare's total spending on new hips and knees, according to research by the Advisory Board Co.
The program would require hospitals to coordinate care and manage costs across surgery teams, primary care, rehabilitation and skilled nursing, home care and physical therapy, said Dr. Thomas Graf, chief medical officer at Geisinger Health System, Danville, Pa., which has developed 17 bundles of care.
Hospitals also must determine which patients would be best suited for which setting. That involves new protocols and data analysis and the ability to identify efficient, high-quality providers in the community.
Medicare has set an ambitious schedule. “It's a little frightening,” Graf said. “It's a significant amount of work.”
Hospitals that cannot manage care to hold spending within the bundled amount would have to repay Medicare the difference after the first year. The gains or losses hospitals see depend on how quickly and successfully they can coordinate all the care patients need during the procedure and in the 90 days thereafter.
Medicare is seeking comment on the proposal through September. “It's highly likely that it will go forward,” Graf said. He expects more CMS-mandatory alternative payment programs to follow as part of an evolution to capitated payment. “This would be the first of many. CMS put their stake in the ground.”
The CMS sought comment in April on expansion of its Bundled Payment for Care Improvement Initiative demonstration, which includes 48 episodes of care under bundled payments, including joint replacement, coronary artery bypass grafts, and treatment for chronic conditions such as diabetes and congestive heart failure.
Medicare has previously experimented with bundled payment for joint replacement and cardiac care. The CMS saw savings, though they were modest. One three-year initiative included 28 cardiac services and another eight orthopedic procedures. It shaved $319 per person off spending.
The private sector also has introduced joint replacement bundled payments and developed others for pregnancy, heart conditions and some cancers. Horizon Blue Cross and Blue Shield of New Jersey has increased the services under bundles to 10 over the past two years and expects to pay for 11,000 bundled episodes of care this year. Overall, bundles have produced favorable results without any “slam dunk,” said Peter Hussey, director of the health services delivery system program for RAND Corp.
MH TAKEAWAYSThe bundling initiative is a signal that the administration wants to rapidly shift away from fee for service, and this may be just the first mandatory alternative payment model.
Broader expansion of bundled payment may prove difficult, however. Attempts to develop other bundles have met with mixed success. The Children's High-Risk Asthma Bundled Payment demonstration by Massachusetts' Medicaid program didn't get off the ground despite years of work. “What we learned is that it's really hard,” said Katharine London, a principal at the Center for Health Law and Economics at the University of Massachusetts.
Other private-sector efforts have seen more success.
Dr. Constantine Mantz, chief medical officer for 21st Century Oncology, said complication rates and toxicity among Humana patients have remained low since the 2012 start of an oncology bundled payment for radiation therapy. He said it has produced “meaningful savings.”
Experts said hips and knees are a good place for the CMS to start on mandatory bundling. “Joint replacement is a particularly good candidate for bundled payments,” said Peter Huckfeldt, an assistant professor of health policy and management at the University of Minnesota. Wide variation in spending after patients leave the hospital offers a clear target for savings.
Hospitals could curb spending with efforts to identify the most cost-effective post-acute providers and settings. Huckfeldt cited a June 2014 Medicare Payment Advisory Commission report that found rehabilitation facilities typically cost 20% to 40% more than skilled-nursing facilities.
Managing costs for joint replacement largely boils down to sending patients to the most appropriate, lowest-cost post-acute setting, said de Brantes, whose organization manages a bundled payment model now being used by some state Medicaid programs and commercial insurers. That's not difficult, but providers rarely do it without a financial incentive. Under bundles, “you start paying attention,” he said.
Bundled payment for joint replacement has been more widely tested than bundles in other clinical areas. The three-year Medicare Acute-Care Demonstration Project, which began in 2009, reduced Medicare spending for joint replacement by $1.1 million across five hospitals. Four national employers have saved “several thousand dollars per case” under a bundled payment initiative for joint replacements launched in January 2014, said David Lansky, CEO of the Pacific Business Group on Health.
Anthem Blue Cross and Blue Shield of Wisconsin has seen significant cost savings from a joint replacement bundle launched in 2014 and the insurer is considering expansion into other orthopedic services, said Dr. Michael Jaeger, the health plan's medical director.
Yet not all bundling programs for joint replacements have succeeded. Health plans and hospitals dropped out of the Integrated Healthcare Associations' private-sector joint replacement bundle effort after organizers lost patience and wrangled over key features.
That underscores the challenge ahead for hospitals given the clear interest from administration officials in accelerating alternative payment methods. Hospitals will have to race to identify the factors driving higher costs for joint replacements and get those costs down while paying close attention to outcomes. “They're going to have to move quickly,” Hussey said. “I'm sure it doesn't feel like enough time.”
Rob Lazerow, a healthcare practice manager at the Advisory Board Co., said the CMS' new bundling program comes as a bit of a surprise. “I don't think providers expected to see mandatory anytime soon.”
Melanie Evans
Melanie Evans
Melanie Evans writes about hospital management and governance issues. She has been part of the Modern Healthcare staff since 2004. Earlier in her career she covered healthcare and not-for-profits as a reporter at the Duluth (Minn.) News Tribune. She received a bachelor's degree in international relations from Boston University and a bachelor's in journalism from the University of Minnesota.
http://www.modernhealthcare.com/article/20150718/MAGAZINE/307189986
Bundling risk: New demo program shows CMS' eagerness to ditch fee for service
By Melanie Evans | July 18, 2015
The deteriorating hips and knees of the nation's seniors were an obvious target for Medicare's first mandatory test of an alternative payment model for hospitals. But joint replacement is not the only possible target, and hospitals are now on notice that Medicare will move ahead if they don't do it on their own.
Starting Jan. 1, nearly 800 hospitals in 75 markets across the country would be required under the proposal to accept bundled payments covering all services for hip and knee replacement procedures, starting with hospital admission and extending for 90 days. They either would have to lower their costs or absorb the losses, which will kick in after the first year of the five-year demonstration. The program is projected to save Medicare $153 million over its duration.
Experts described the mandatory bundling initiative as bold but not surprising. Rather, the announcement is the latest and clearest signal from the administration that the nation's hospitals and doctors increasingly will be paid under contracts that put them at risk for financial losses if they don't meet cost and quality targets.
“This should not come as a big shock to anyone,” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute.
That's because Obama administration officials in January pledged to move more than $100 billion in annual Medicare spending into new contracts that change how hospitals, doctors and others are paid no later than 2018.
The administration is seeking alternatives to traditional Medicare's fee-for-service system, which rewards volume rather than outcomes. The goal is to replace those volume incentives with rewards for more cost-effectively managing costs and outcomes.
Source: The Advisory Board Co.
The Affordable Care Act gave HHS' secretary authority, without congressional approval, to expand demonstrations of alternative payment and delivery models if they are shown to reduce spending growth without reducing quality, or if they improve patient care without boosting spending. So HHS can now roll out successful models throughout Medicare on a mandatory basis. Indeed, some experts have been urging the administration to roll out demonstrations that prove successful throughout Medicare as a way to strengthen the ACA's cost-saving and quality improvement results.
“We know that this will produce savings, so the hope is that it can be expanded on a mandatory basis nationwide within two years,” said Topher Spiro, vice president for health policy at the Center for American Progress.
The CMS' new proposal would bundle all care for joint replacement into one payment per patient, including the hospital stay and everything that follows for 90 days. Joint replacements cost Medicare $7 billion last year. But that amount does not include spending for care after patients leave the hospital, which varies widely and makes up nearly half of Medicare's total spending on new hips and knees, according to research by the Advisory Board Co.
The program would require hospitals to coordinate care and manage costs across surgery teams, primary care, rehabilitation and skilled nursing, home care and physical therapy, said Dr. Thomas Graf, chief medical officer at Geisinger Health System, Danville, Pa., which has developed 17 bundles of care.
Hospitals also must determine which patients would be best suited for which setting. That involves new protocols and data analysis and the ability to identify efficient, high-quality providers in the community.
Medicare has set an ambitious schedule. “It's a little frightening,” Graf said. “It's a significant amount of work.”
Hospitals that cannot manage care to hold spending within the bundled amount would have to repay Medicare the difference after the first year. The gains or losses hospitals see depend on how quickly and successfully they can coordinate all the care patients need during the procedure and in the 90 days thereafter.
Medicare is seeking comment on the proposal through September. “It's highly likely that it will go forward,” Graf said. He expects more CMS-mandatory alternative payment programs to follow as part of an evolution to capitated payment. “This would be the first of many. CMS put their stake in the ground.”
The CMS sought comment in April on expansion of its Bundled Payment for Care Improvement Initiative demonstration, which includes 48 episodes of care under bundled payments, including joint replacement, coronary artery bypass grafts, and treatment for chronic conditions such as diabetes and congestive heart failure.
Medicare has previously experimented with bundled payment for joint replacement and cardiac care. The CMS saw savings, though they were modest. One three-year initiative included 28 cardiac services and another eight orthopedic procedures. It shaved $319 per person off spending.
The private sector also has introduced joint replacement bundled payments and developed others for pregnancy, heart conditions and some cancers. Horizon Blue Cross and Blue Shield of New Jersey has increased the services under bundles to 10 over the past two years and expects to pay for 11,000 bundled episodes of care this year. Overall, bundles have produced favorable results without any “slam dunk,” said Peter Hussey, director of the health services delivery system program for RAND Corp.
MH TAKEAWAYSThe bundling initiative is a signal that the administration wants to rapidly shift away from fee for service, and this may be just the first mandatory alternative payment model.
Broader expansion of bundled payment may prove difficult, however. Attempts to develop other bundles have met with mixed success. The Children's High-Risk Asthma Bundled Payment demonstration by Massachusetts' Medicaid program didn't get off the ground despite years of work. “What we learned is that it's really hard,” said Katharine London, a principal at the Center for Health Law and Economics at the University of Massachusetts.
Other private-sector efforts have seen more success.
Dr. Constantine Mantz, chief medical officer for 21st Century Oncology, said complication rates and toxicity among Humana patients have remained low since the 2012 start of an oncology bundled payment for radiation therapy. He said it has produced “meaningful savings.”
Experts said hips and knees are a good place for the CMS to start on mandatory bundling. “Joint replacement is a particularly good candidate for bundled payments,” said Peter Huckfeldt, an assistant professor of health policy and management at the University of Minnesota. Wide variation in spending after patients leave the hospital offers a clear target for savings.
Hospitals could curb spending with efforts to identify the most cost-effective post-acute providers and settings. Huckfeldt cited a June 2014 Medicare Payment Advisory Commission report that found rehabilitation facilities typically cost 20% to 40% more than skilled-nursing facilities.
Managing costs for joint replacement largely boils down to sending patients to the most appropriate, lowest-cost post-acute setting, said de Brantes, whose organization manages a bundled payment model now being used by some state Medicaid programs and commercial insurers. That's not difficult, but providers rarely do it without a financial incentive. Under bundles, “you start paying attention,” he said.
Bundled payment for joint replacement has been more widely tested than bundles in other clinical areas. The three-year Medicare Acute-Care Demonstration Project, which began in 2009, reduced Medicare spending for joint replacement by $1.1 million across five hospitals. Four national employers have saved “several thousand dollars per case” under a bundled payment initiative for joint replacements launched in January 2014, said David Lansky, CEO of the Pacific Business Group on Health.
Anthem Blue Cross and Blue Shield of Wisconsin has seen significant cost savings from a joint replacement bundle launched in 2014 and the insurer is considering expansion into other orthopedic services, said Dr. Michael Jaeger, the health plan's medical director.
Yet not all bundling programs for joint replacements have succeeded. Health plans and hospitals dropped out of the Integrated Healthcare Associations' private-sector joint replacement bundle effort after organizers lost patience and wrangled over key features.
That underscores the challenge ahead for hospitals given the clear interest from administration officials in accelerating alternative payment methods. Hospitals will have to race to identify the factors driving higher costs for joint replacements and get those costs down while paying close attention to outcomes. “They're going to have to move quickly,” Hussey said. “I'm sure it doesn't feel like enough time.”
Rob Lazerow, a healthcare practice manager at the Advisory Board Co., said the CMS' new bundling program comes as a bit of a surprise. “I don't think providers expected to see mandatory anytime soon.”
Melanie Evans
Melanie Evans
Melanie Evans writes about hospital management and governance issues. She has been part of the Modern Healthcare staff since 2004. Earlier in her career she covered healthcare and not-for-profits as a reporter at the Duluth (Minn.) News Tribune. She received a bachelor's degree in international relations from Boston University and a bachelor's in journalism from the University of Minnesota.
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If they want to change how they pay us, fine. I don't care. As long as they pay. They can play games with how they package, bundled or dole out the payments, if the makes them feel better. If they want to pretend to their constituents they're cutting spending, the same guys who have overspent by $18,000,000,000,000 and counting, then they can go right ahead. Just keep paying. Most of these payment schemes are nothing more than thinly veiled ways for the politicians and their buddies in the hospital-insurance-lawyer-industrial complex to pocket more money for themselves, in the name of "savings." Anyone who thinks its altruistic or the common good is naive.
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A patient who is less than ideal is likely to be forced to suffer under this plan. The hospital itself cannot control every aspect of care provided by all the teams. Its completely unreasonable.
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This is the sole response to the article and it's prescient:
- frank poggio Jul 20. 2015 9:29am
As new as bundled payments may sound they date back to 1980!
Medicare established bundled payments under the End Stage Renal Decease Program back then and has paid on that basis ever since. If you look at what transpired over the last thirty years under ESRD you can readily predict what will happen here. Shortly after bundled renal payments were established by Medicare many for profit dialysis centers were started. In the 1990’s commercial renal centers made ‘bundles’ of money, then as Medicare tightened the payment vise they got out of the business and non-profit hospital /clinic programs returned.
Expect the same to happen with hips and knees. I bet there are twenty orthopod groups talking to private investors as I write this note.
Frank Poggio
The Kelzon Group
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Glad the ACA continues to improve healthcare delivery with 'cost-savings and quality improvement results' 
