Implications of the Cardiac Bundled Payment

January 5, 2017

On January 1st, 2018, Medicare will start a five year pilot of alternative payment models to manage patients with AMI and PCI in certain Metropolitan Selected Areas. The announcement focuses on two initiatives -

Bundled Payments - Selected hospitals will receive a bundled payment for managing patients with AMI and CABG, beginning with a hospitalization and extending for 90 days following hospital discharge. Under these models, providers and suppliers will continue to be paid under the usual payment system rules and procedures of the Medicare program for episode services throughout the year. At the end of each year, actual spending for the episode would be compared to a target price that reflects episode quality. Hospitals that deliver needed care for less than the quality-adjusted target price, while meeting or exceeding quality standards, would be paid the savings achieved. Hospitals with costs exceeding the budget and quality-adjusted target price would be required to repay Medicare.

By structuring payment around a patient’s total experience of care, Medicare’s goal is to incentivize hospitals to support better care coordination and quality of care which will ultimately lead to improved patient outcomes and reduce costs of care delivery.

Incentive Payments for Cardiac Rehab - This initiative aims to test the impact of providing an incentive payment to selected hospitals to increase the utilization of cardiac rehab (CR) for AMI and CABG patients. Incentive payments will be paid retrospectively at the rate of $25/session for the first 11 sessions and $175/session for every additional session after. Following completion of any Incentive Payment Model performance year, hospitals will receive payments from Medicare based on the number of attended patient-sessions. Hospitals may use these payments to provide additional services that make it easier for patients to attend cardiac rehab.

Here we highlight several key implications of bundled-payment models as pertaining to cardiac care:

  1. End-to-end care - The biggest implication of bundled payment model is that hospitals are now responsible for the total/end-end patient experience. Healthcare delivery is fragmented. A patient may need to visit the hospital, emergency room, outpatient center, labs… to manage one condition. Each of these units provide different services to patients and often do not talk to each other. This fragmentation gives rise to redundancies (multiple lab tests or procedures), gaps in care (no responsible party to ensure that patients receive all guidelines and recommendations) and a poor patient experience generated by the need to navigate a complex, broken and fragmented system. The beauty of bundled payments is it that hospitals are now responsible for managing the total patient episode including post-acute care. Now, hospitals have to map out a discharge plan, identify all required services, negotiate with the different service providers and streamline patient experience to ensure quality care at the lowest cost.
  1. Care coordination & the need for care navigators - A functional disconnect exists between the three “silos” (ED, Outpatient Clinic and Hospital) in which healthcare is presently delivered. The care provided within each silo may be superlative, but prompt and effective communication between silos is often not sufficient. For example, patients discharged from hospital following AMI have limited access to telephone consultation with their personal physician or other physicians in the event of an abrupt change in symptoms. They often opt for an ED visit, when a brief telephone discussion with a healthcare professional knowledgeable about their medical status, including CR staff, might suffice to alleviate the patient’s concerns and provide an appropriate alternative to an ED visit. To be successful in the bundle, hospitals need to ensure a more collaborative culture between all the providers and create care navigation teams that will serve as a concierge for patients but also a liaison between all the different parties.
  2. The care team must also ensure that patients stay within the hospital’s care pathway and only choose providers within the "bundled network”. This is important because patients who stray off path may go to another provider whose fees are higher and may not deliver the same quality of care as a pre-vetted in-network provider. Out-of-network providers can lead to higher costs and lower quality.
  1. Reducing Readmissions through Post acute care management - Ensuring patients get into the right post-acute pathway is important and having strong communication between the hospital and the partner facilities is crucial in ensuring patients receive best practice care post-discharge. This requires each party has access to the patient’s medical record. Thus inter-provider interoperability and data exchange will be key.
  1. Patient Engagement Outside the hospital using Telehealth tools - Another effect of bundled payments lies in forcing hospitals to be more patient-centered. Hospitals need to build better relationships with patients and treat them as an equal partners in order for both parties to be successful. To achieve such a partnership, hospitals need better tools to engage patients outside the clinic and empower them to easily navigate their episode of care, communicate with their providers and take responsibility for managing their health. There is mounting evidence to show that telehealth tools such as mobile apps are effective in ensuring patients are compliant with their medications and lifestyle recommendations such as diet and exercise, tracking and managing their vitals, receiving education on how to reduce their risk factors and improving communicate with their care providers. The data and insights from these apps can also help providers monitor patients remotely and intervene promptly, and dispatch patients to the appropriate care setting outside of the ED. In short, these new payment models coupled with powerful telehealth tools can usher in an era of customer service that is grossly lacking in healthcare. These tools have the potential to help hospitals deliver exceptional, concierge-grade customer service to patients.
  2. Data and Analytics - In order to be successful, hospitals must have data and strong analysts at their disposal to identify the riskiest patients, analyze the historical costs, compare performance of the different providers and continue to fine-tune their pathways with the best partners in their network.
  3. Bundled payments represent a tremendous opportunity for hospitals to further optimize their care and improve patient experience. The pace and adoption of these models may vary but no one can doubt that value-based care that satisfies the triple aims of low cost, high quality and top-notch patient experiences is getting a much needed push.

Below are some additional resources to learn more about bundled payment new models and strategies for success.

  1. CMS Bundled Payment Announcement
  2. AACVPR Roadmap 2 Reform: Turnkey Strategies for CR programs to increase referral, enrollment and adherence by the American Association for Cardiac and Pulmonary Rehabilitation
  3. Increasing Cardiac Rehabilitation Participation From 20% to 70%: A Road Map From the Million Hearts Cardiac Rehabilitation Collaborative

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