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Early Adopters of Bundled Payments Discuss Challenges, Lessons Learned

Kim Krisberg , special to AAMCNews
September 27, 2016

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The Affordable Care Act may be known primarily for expanding insurance coverage, but the law has also been instrumental in launching new payment methods designed to help institutions continue to provide quality patient care while reducing costs. One of those efforts is known as bundled payments—a method that rarely makes headlines but is quietly transforming the traditional way of care delivery.

Administered by the Center for Medicare and Medicaid Innovation (CMMI), the Bundled Payments for Care Improvement (BPCI) initiative combines Medicare payments for all services related to one of 48 clinical episodes of care. Providers may participate in one of four models.

Most academic medical centers participate in Model 2 of BPCI, in which Medicare sets a condition- or procedure-specific target price for the patient’s complete care during a hospital admission and 30, 60, or 90 days post-discharge. The provider’s actual Medicare fee-for-service payments are reconciled against the target amount. If total payments fall below the target, the provider receives these savings as a payment from Medicare. Conversely, if the payments exceed the target, the provider owes money to Medicare.

This patient-centered model is intended to promote better coordination of care and ultimately improve health outcomes. It offers an incentive for providers to focus on quality of care over quantity and to address any problems that also result in revenue loss. And the model prepares institutions for a future in which Medicare reimbursement will be increasingly aligned with quality metrics.

NYU Langone Medical Center was the first teaching hospital in the AAMC Facilitator-Convener Group to join the risk phase of BPCI. The medical center chose to focus on major joint replacement of the lower extremity, spinal fusion, and cardiac valve replacement.

“Just going through the process and making the bundle work make all aspects of care delivery better,” said NYU Langone’s Richard Iorio, MD, chief of adult reconstructive surgery and the William and Susan Jaffe Professor of Orthopaedic Surgery. “When you analyze the data, act on the data, and use it from an evidence-based standpoint, you can’t help but get better.”

“Just going through the process and making the bundle work make all aspects of care delivery better.”

Richard Iorio, MD

Iorio said that surgeons are compelled to take a more holistic view of patients within a bundled framework. For example, before surgery, patients are now routinely counseled on issues such as tobacco use, depression, and diabetes—conditions and behaviors that up the risk of post-surgical complications and increase the likelihood that the episode payments will exceed the target amount.

All of Langone’s efforts have paid off. In March 2016, NYU researchers presented data on the impact of BPCI on total joint replacements at a meeting of the American Academy of Orthopaedic Surgeons. On average, Langone’s discharges to inpatient rehabilitation declined from 44 percent to 28 percent; 30-, 60-, and 90-day readmissions decreased; and Medicare cost of care per episode decreased nearly $7,000 over three years—all while sustaining and improving quality of care.

Iorio said the idea that bundling is an administratively driven process is a big misconception. Instead, he said bundled payments must be a physician- and surgeon-driven effort. “If physicians and surgeons aren’t intimately involved, it won’t work. There needs to be completely transparent data transmission between doctors and hospitals so they can understand how behavior affects costs and how to make things more efficient.”

At Northwestern Memorial Hospital in Chicago, access to historical Medicare claims data and enhanced use of internal data proved critical to implementing BPCI, said Hannah Alphs Jackson, MD, MHSA, program director for value-based delivery at the hospital and an assistant professor at Northwestern University Feinberg School of Medicine.

For instance, congestive heart failure (CHF) data informed strategies to reduce readmissions, and stroke data jumpstarted conversations on how the hospital was partnering with rehab facilities, said Jackson. Previously, cardiologists were unaware when CHF patients entered the hospital, as these patients often present with a different primary clinical need. The hospital now produces a daily list of all patients with heart failure admitted anywhere in the facility. The richer data not only support the BPCI effort, but have had a positive trickle-down effect, by identifying new patients for clinical trials and advanced heart failure programs, Jackson said.

Penn State Hershey Health System joined the risk phase of BPCI in 2014 with 90-day stroke and CHF episodes. For the many patients who live hours from the hospital and get follow-up care outside the system’s primary care network, following them after discharge was challenging but necessary for success, said Craig Mancia, MHA, project manager at the health system. Stroke care improved at Hershey and in the broader region.

Hershey’s telestroke center provides real-time audiovisual access to a neurological consult, which has enhanced the ability of partner facilities to care for stroke patients where they live. Having the telestroke service, however, also means that the stroke patients treated at Hershey are often the most severe and complicated cases.

Consequently, Hershey’s historical Center for Medicare and Medicaid Services (CMS) stroke data on which its target prices are based do not reflect these changes in the stroke patient population.

While some providers may believe the CMS pilot threatens their autonomy and reimbursement, the ideal way to view bundled payments is as an “opportunity to coordinate care across the continuum,” said Gregory Golladay, MD, Adult Reconstruction Fellowship director and associate professor of orthopaedic surgery at Virginia Commonwealth University (VCU) Health.

To date, the most important change to emerge at VCU is ensuring that patients are as healthy as possible before surgery to reduce the risk of post-operative complications, Golladay reported. The change meant VCU Health had to revamp coordination of screening services and specialty care for joint replacement patients. Today, 100 percent of patients scheduled for elective joint replacement surgery are directed to the health system’s Preoperative Assessment Communication and Education clinic. The results so far include a reduction in the severity of kidney injuries among joint replacement patients and a 75 percent reduction in blood transfusions following surgery.

Although CMS eventually excluded the Richmond area where VCU resides from the mandatory hip and knee replacement bundled initiative that began in April 2015, the health system decided to stick with the bundled approach anyway.

“Just knowing where you stand in terms of the data and then being able to have the courage to admit where you have room for improvement has made a huge difference for us,” said Golladay. “It’s just like a 12-step program—first, you have to admit you have a problem.”

This article originally appeared in print in the May/June 2016 issue of the AAMC Reporter.

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