BUNDLED PAYMENTS — THE NEXT WAVE OF INCLUSIVENESS
Tom James , MD
The Medicare Access and CHIP Reauthorization Act of 2015 ( MACRA ) replaces the old Sustainable Growth Rate ( SGR ) formula used by the Centers for Medicare and Medicaid Services ( CMS ) as a way to control the escalating cost of medical care . The MACRA legislation provides several different options for physicians and other providers to share in financial risk arrangements ( See Louisville Medicine , July , 2016 ). Among the multiple options available under MACRA is that of Bundled Payments .
From the employer and health care consumer perspective , bundled payments make sense . When a person purchases a car , all of the components are included in the package price . There is not a fee for the motor , a separate one for the on-board computer , and a third for the chassis . Most people find the unbundling of services by airlines as annoying , feeling that the airlines are somehow price gouging with all those separate charges for bags , food , and seat position . But that is what the consumer faces with medical procedures . Even if Medicare or commercial insurance pays for a procedure , the patient receives separate bills from the hospital and from each physician who was involved in the case . The patient and family have to sort out all the various bills and insurance statements . The Sunday , Aug . 21 st issue of The New York Times had a large article on the “ cottage industry that has sprung up ” to help deal with the confusion of multiple bills .
This is one reason why CMS feels that including participation in bundled payments can be a win for the consumer . But it also believes adoption of bundled payments by commercial insurers will be a win for the employer , who is likely to see lower costs and fewer confused employees . CMS is trying to make participation in bundled payments a win for the physician by including it in the Advanced Payment Models of MACRA , where there is a greater likelihood of higher reimbursements . The concept of bundled payments is that there is a single payment made for an episode of care . This may be an episode that starts three days prior to a surgery ( so it would include pre-op labs and assessment ) and go through all services related to the procedure for 30 days post-operatively . Not all bundled episodes are of the same duration because of the nature of the procedure or medical care service . Think about the differences in “ global payment ” duration under Medicare .
Bundled payments have been around for several decades and are used in the payment for human organ transplants , renal disease ,
Lasik and other procedures . In 2009 , CMS entered into a three-year pilot with five western hospital systems for a “ global payment ” ( aka a bundled payment ) for total hip and knee replacement . This was the Acute Care Episode Demonstration Project or ACE project . Based upon the finding of reduced cost and improved quality metrics , the federal government expanded this to the Comprehensive Joint Replace Program ( CJR ) that is now functioning in 67 geographic areas around the United States . CMS anticipates making this model mandatory for a Medicare participating facility engaged in total joint replacements within the next two years . Originally Medicare ACOs were excluded from these bundled payment programs for orthopedics but in July of this year CMS modified the rules allowing Medicare ACOs to participate in CMS sponsored bundled payment programs , although there are payment adjustments to prevent physician groups from “ double dipping ” in savings achieved by the ACO and by the bundled payment .
CMS has also begun including Coronary Artery By-Pass Surgery ( CABG ) in a cardiac bundle . The rapid growth has been astounding . CMS now has 48 separate medical or surgical conditions that it includes in its Bundled Payments for Care Improvement project ( BPCI ). Fifteen of the more than 300 sites nationally are in Kentucky . Most of the models of payment within the BPCI projects are ones with a retrospective payment . That means that the individual facilities , labs and physicians submit their claims to CMS which then calculates a risk-adjusted payment which is a single check sent to the sponsor . It is the responsibility of the sponsor to divide that payment among all of the providers using a previously agreed-upon formula . The Bundled Payments for Care Improvement group and some of the commercial payers are experimenting with a different model where the service is authorized prospectively , and a risk score is calculated based upon the individual ’ s medical conditions . Some groups are advocating inclusion of risk , based upon the social determinants of health .
Medical conditions have been added to the bundle creating a larger set of diagnoses for management . This may include diabetes , coronary artery disease or chronic obstructive lung disease . By using the analytics from Prometheus , the researchers were able to stratify 96 percent of a sample of 1,580 patients with diabetes into variously defined buckets . Once the physician recognized the complexity of each patient with diabetes an algorithm could be used to manage that subgroup more effectively with lower costs . For chronic medical conditions the typical monitoring period is 12 months so that seasonal variations in use of resources can be neutralized .
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