In the face of big policy unknowns in health and human service, it appears that one practice is likely to remain with us – reimbursing service provider organizations for value from a wide array of value-based reimbursement models. And the discussion at last week’s 2017 OPEN MINDS Performance Management Institute demonstrated that there is considerable momentum in that direction – see The Value Train Has Left The Station, Building The ‘Next Generation’ Behavioral & Social Service ACO, and Where Are We On The Path To Value-Based Reimbursement?.
Supporting that discussion are two recent studies that I found striking – both focused on the shift to bundled rates. (Bundled rates involve grouping all of a consumer’s costs into a single payment, irrespective of the types and quantities of the services provided – see Under The Bundled Umbrella: The New Financing Models Shaping Health Care.)
The first study found, predictably I would say, that the setting of care was more highly correlated with the total cost of post-acute surgical care than the intensity of services provided to consumers. This analysis looked at Medicare fee-for-service beneficiaries recovering from total hip replacement, coronary artery bypass grafting, and colectomy (see Post-Acute Care Spending After Surgery Driven By Care Setting). Essentially, cost was driven by the service setting to which consumers were referred.
The second study was an early look at the findings of the Medicare bundled rate initiative. In 2014, Medicare launch bundled rates for joint replacements (see Medicare Bundled Payments Initiative Allows Some Participants To Waive Three-Day Inpatient Rule For Covered Skilled Nursing Facility Care). A study of 3,942 Medicare beneficiaries with lower extremity joint replacement at Baptist Health System (BHS), which participated in the voluntary Acute Care Episodes (ACE) and Bundled Payments for Care Improvement (BPCI) demonstration projects, found that bundled payments cut the cost of Medicare post-acute care (PAC) episodes by 27% (see Bundled Payments Cut Medicare Post-Acute Care Episodes Costs By 27%). Total costs per episode decreased by $5,577, about 20.8%, while readmissions declined by 1.4%, and emergency department visits declined by 0.9%. (For more on the BPCI Initiative results, check out Are Bundled Payments Working? An Evaluation Of The Medicare Bundled Payments For Care Improvement (BPCI) Initiative.)
While your organization may not be particularly interested in joint replacements or coronary artery bypass grafting, the bigger issue is that “gainsharing” that involves provider organizations assuming some financial risk does move the needle in terms of total consumer costs. And, we are likely to see the development of more bundled rates, episodic rates, and case rates as a reimbursement vehicle for both acute and chronic conditions.
For more on our coverage of this shift in reimbursements, check out these resources from the OPEN MINDS Industry Library:
- Medicaid Episodes Of Care & Other Weird Arrangements
- First Medicare, Now Pennsylvania Medicaid
- Medicare Bets Big On Pay-For-Value
- Value-Based Reimbursement & Accounting: Show Me The Money
- CCBHCs Are Moving Forward – What This Means If Your State Isn’t Moving Forward
Want to continue the conversation on the changing reimbursement landscape? Tune in for the upcoming and exclusive Web briefing for OPEN MINDS elite-level members, “Where Are We With Value-Based Purchasing? An Executive Update,” on Thursday, June 29, at 1 p.m. Eastern. Learn about the benefits of becoming an Elite-level OPEN MINDS subscriber. And also mark your calendars for June 7 at The 2017 OPEN MINDS Strategy & Innovation Institute, and the session “Key Competencies For Population Health Management: Preparing For Value-Based Reimbursement” featuring OPEN MINDS Senior Associate Ken Carr.