1.800.360.0603

GE Healthcare Camden Group Insights Blog

Bundled Payments and the Breakthrough Power of Partnerships

Posted by Matthew Smith on Jul 30, 2015 1:00:19 PM

By Kimberly Hartsfield, MPA, Vice President, The Camden Group

Bundled Payments, PartnershipsAs bundled payment programs are expanding across specialties, payers, and sites of care, it is becoming increasingly clear that the path to success can be summarized in one word: partnerships.

Who is your Apple?

Consider the successful partnership between Nike and Apple. Although they are in different industries, their commonality lies in their customers. As a result of their partnership, both companies have experienced enhanced brand recognition, in addition to significant market and sales growth. Nike CEO, Mark Parker said about their partnership with Apple, “As I look ahead at what's possible with Nike and Apple...technologically we can do things together that we couldn't do independently. So yeah, that's part of our plan, is to expand the whole digital frontier and go from...25 million Nike+ users to hundreds of millions (theverge.com).”[1] Who is that perfect partner that you had not previously considered, and what can you accomplish together?

Why it Matters

How do these strategic partnership examples apply to healthcare? The same patient that has an inpatient stay and is discharged to a post acute care facility has one goal: to get home pain-free as fast as they can. Bundled payment arrangements are holding both providers accountable very differently than the traditional fee-for-service model. How can potential partners leverage one another to expand their existing capabilities and utilize resources in innovative ways? All provider organizations are facing demand destruction pressures, and partnering may help both parties retain much needed volumes and revenues, while continuing to provide excellent patient quality.

New relationships between providers, and between payers and providers, are being forged to advance payment transformation efforts through bundled payments. Providers are looking beyond their four walls, obtaining, analyzing, and sharing data, and partnering across the care continuum to enable patient-centric care delivery with a new focus on value and total cost of care.

Identifying the right partner organizations is paramount to a successful bundled payment program. Providers should consider partnerships with organizations that are innovative, philosophically aligned around value-based care, cost-efficient, and high performing in their markets. Today’s strategic partnership evaluations require a willingness to look beyond the closest geographic provider or the provider organization that has historically been the preferred referral choice. Publically available data from sources such as The Centers for Medicare and Medicaid Services ("CMS") Hospital Compare, Nursing Home Compare, Home Health Compare, Physician Compare, and Dialysis Facility Compare enable providers to proactively evaluate and identify potential candidates for partnership.

The Right Sandbox

Bundled payments are the perfect testing ground for partnerships where gainsharing programs can be established to strengthen provider engagement and evaluate potential for long-term strategic alignment. This allows participants to demonstrate their ability to eliminate unnecessary variation in care and meet the agreed upon goals of the program without assuming risk that providers may not be prepared to manage. Bundled payment programs and accountable care organization initiatives can be very complementary, and many organizations are choosing to pursue both simultaneously.

The ability to expand the external focus and consider the full continuum of care requires very different commitment and communication between providers. Partners must develop innovative solutions and continue to make information technology investments to overcome the frequent inability of electronic medical records to transmit data between different platforms and providers. They must also be willing to collaborate clinically through the standardization of care protocols and/or seamless coordination across care settings. Perhaps more importantly, they must be willing to demonstrate mutual accountability for patient outcomes and the total cost of care.


[1] http://www.theverge.com/2014/10/23/7044999/nike-apple-wearables-partnership

Kimberly Hartsfield, Bundled Payment, Payment Reform, The Camden GroupMs. Hartsfield is a vice president with The Camden Group. She specializes in payment transformation strategies with a focus on designing and implementing Medicare and commercial bundled payments. She frequently presents on a variety of topics including value-based payment models and provider engagement. She may be reached at khartsfield@thecamdengroup.com or 501.940.2526. 

 
 

 

Topics: Payment Reform, Bundled Payment, Deirdre Baggot, Kimberly Hartsfield, Payment Models

The Bundled Payment Imperative: CMS Moves Closer to a Mandate

Posted by Matthew Smith on Jul 13, 2015 6:41:46 PM

By Deirdre Baggot, PhD, Former CMS Expert Reviewer, Bundled Payments for Care Improvement Initiative, Senior Vice President, The Camden Group

Kimberly Hartsfield, MPA, Vice President, The Camden Group

Bundled Payments, CMS, Joint ReplacementRapidly following on the heels of its oncology bundles announcement, the Centers for Medicare and Medicaid (“CMS”) announced on July 9 a new proposed mandate for a 90-day retrospective bundled payment model. This model impacts Medicare beneficiaries receiving lower extremity joint replacement or reattachment of lower extremity procedures, in the 75 designated geographic areas. Modeled after the Bundled Payments for Care Improvement (“BPCI”) program and evidenced by the Acute Care Episode (“ACE”) demonstration project, CMS puts forth that the Comprehensive Care for Joint Replacement (“CCJR”) model aims to improve cost efficiencies, patient outcomes, and collaboration among various types of providers for an episode of care.

Key Program Components

  • Only hospitals and health systems are eligible to “own” the bundle. Physicians and physician groups are not eligible to “own” the bundle. Financial liability for the 90-day episode is assigned to the hospital.
  • 90-day retrospective bundle
  • Joint replacements only
  • Gainshare waiver is available
  • No downside risk in year one
  • Five-year term (as compared with a three-year term for BPCI)
  • No lengthy or costly application process (relative to CMS bundled payments pilots)
  • BPCI participants are excluded from mandatory participation
  • Similar to the Medicare Shared Savings Program, there are minimum quality performance measures that must be achieved in order to be eligible for payment reconciliation.

Defining the Impact on Providers

The overall impact of bundled payments will be demand destruction related to unnecessary testing and treatments. Providers should expect to see:

  • reduced inpatient diagnostic testing
  • shorter lengths of stay
  • reduced avoidable readmissions
  • significant decline in inpatient rehab and SNF utilization
  • closer scrutiny related to supply cost and physician preference items

Bundled payments motivate a new set of behaviors for physicians aimed at giving patients exactly what they need in the most cost effective setting and nothing more.

This is a retrospective bundle so the impact on day-to-day claims processing operations will be minimal. All hospitals participating in the CCJR program will continue to be paid Medicare fee-for-service payments under the Inpatient Prospective Payment System, and subject to yearly reconciliation against a set target price. The proposed rule states that hospitals that perform better than the target price will only be eligible for a positive reconciliation payment if the mandatory quality metrics are achieved, such as complications, readmissions, and patient experience measures. Similarly to BPCI, in the first year of CCJR, participating hospitals will not face any downside risk.

Other features of the CCJR model are similar to BPCI in terms of permissible waivers and the alignment of care redesign with potential gainshare payments to physicians. The 439-page proposed rule is open for public comment, which closes September 8, 2015.

Determining the 75 Markets

The selected markets were chosen because they represent a high density of Medicare recipients. CMS excluded regions that did not have sufficient volume of DRGs 469 and 470, as well as regions with very high BPCI penetration. CMS was left with just under 200 regions, from which they selected 75 of those 200. In addition, CMS differentially selected higher cost regions more often than lower cost regions (in terms of the average hip replacement episode cost). The 75 markets represent approximately 800 hospital providers.

Start Date and Eligible Providers for Mandatory Joint Replacement Bundles

The initiative is proposed to begin January 1, 2016, and would be in place for 5 years. The CCJR model will target lower-extremity joint replacement (“LEJR”) episodes for Medicare Severity-Diagnosis Related Groups 469 and 470. Similar to Model 2 in the BPCI program, the episodes of care will be initiated upon inpatient admission to an acute care hospital and include all related post-acute care for 90 days post-discharge. Only acute care hospitals will be eligible to be episode initiators under the CCJR program, as compared with other types of entities participating in BPCI such as physician group practices and post-acute providers. Given that this is a proposed mandate, there will be no enrollment or application process involved for eligible hospitals to participate. CMS has stated in the proposed rule that the CCJR is not an extension of BPCI itself, and will not impact hospitals that are currently live with LEJR episodes in the BPCI program.

Required Minimum Quality Reporting to be Eligible for Savings Pay Out

There are two quality aspects that are important to payment under this initiative:

  1. Hospitals must meet a certain threshold on three specific quality measures (30th percentile in years 1-3 and 40th percentile in years 4-5) in order to qualify for a reconciliation payment. If they do not meet the threshold, they are not eligible to receive a reconciliation payment. The National Quality Forum (“NQF”) measures are as follows:
    • NQF 1551: Hospital-level 30-day, all-cause risk-standardized readmission rate following elective primary total hip arthroplasty (“THA”) and/or total knee arthroplasty (“TKA”)
    • NQF 1550: hospital-level risk-standardized complication rate following elective primary THA and/or TKA
    • NQF 0166: HCAHPS survey
  2. If hospitals elect to submit THA/TKA voluntary data (a patient-reported outcome-based measure) as requested by CMS, the discount percentage applied to calculate their target will be reduced by 0.3%

For acute care hospitals within the 75 MSAs, especially those not currently participating in a payment reform initiative of this kind, this proposed rule represents a clear signal regarding CMS’s commitment to using bundled payments as an alternative to fee-for-service reimbursement.  Very consistent with CMS’s approach to policy change—carrot first and then the stick—all prior bundled payments pilots were voluntary whereas this initiative is mandatory. Last week’s announcement will press providers to accelerate their efforts to lock into a post-acute network.


Ms. Baggot is a senior vice president with The Camden Group and is a former CMS Expert Reviewer for BPCI and former lead for CMS Acute Care Episode Demonstration. Ms. Baggot is a frequently invited keynote speaker on payment reform and bundled payments. She may be reached at dbaggot@thecamdengroup.com or 303-335-7047.

 

 

 

Ms. Hartsfield is a vice president with The Camden Group. She specializes in payment transformation strategies with a focus on designing and implementing Medicare and commercial bundled payments. She frequently presents on a variety of topics including value-based payment models and provider engagement. She may be reached at khartsfield@thecamdengroup.com or 501-940-2526. 

 

 

Topics: Bundled Payments, Deirdre Baggot, Kimberly Hartsfield, BPCI, Medicare Bundled Payments, CCJR

The Payment Reform Mash-Up: Top 10 Smart Leadership Strategies for Managing in an Era of “Fusion” Reimbursement Models

Posted by Matthew Smith on Feb 3, 2015 10:16:00 AM
By Deirdre Baggot, MBA, Ph.D., Senior Vice President, The Camden Group and Kimberly Hartsfield, MPA, Vice President, The Camden Group

Bundled Payment, Payment Reform, Clinical IntegrationFew would argue that this may be one of the most exciting times in healthcare – volatile and disruptive, yet also transformative and empowering for those organizations and innovative leaders who are able to move markets by embracing “fusion” reimbursement models. While not all leaders have relished these challenges, many of their more adaptable and failure tolerant counterparts are at the forefront of payment transformation and reconceiving their payer strategy today. Now is the time to for true transformation, and those innovators who meet the changes head-on are far more likely to succeed than their overly cautious counterparts, who may well find themselves left behind. Here are the top ten strategies of transformational leaders who are taking the healthcare “bull by the horns” and redesigning their business model to seize the inherent opportunity of payment transformation.

1.  Have great timing

In an era of payment transformation, building value is not enough. Moving from building value to extracting and trading value requires appropriate timing. The inherent threat of demand destruction that both bundled payments and ACOs drive require many providers to reconceive their business model. The key is to time new payer arrangements with the redesign of the care models. The transformation is already well underway, and the clock is ticking for those who have not embraced this as their future.

2.  Risk is your friend

Risk is described as the gap between opportunity and success. Without it, the greatest opportunities an organization holds will not have the possibility to develop. Organizations are charting new territory, and creating success in the future is contingent upon leadership’s willingness to “run to risk.” Keeping an open mind and viewing the future from a broad perspective will allow an organization to identify opportunities for risk that make sense. Risk tolerance goes hand in hand with failure tolerance (see number 7).

3.  Think like Google

In industry transformation, talent becomes the linchpin asset. Identifying all-stars and empowering them in a way never done before may mean beginning to build teams that look more like a group of Google interns. Ask them what unproductive activities are they wasting their time on each day? Who are the creative thinkers within the organization, and how much time are they spending envisioning the future? An organization must continually innovate to stay ahead of competitors, while recognizing both its market and the healthcare industry are in a rapid state of flux. A wait and see approach will not cut it. The experience people (both customers/patients as well as internal audiences) have within a system must be described as prompt/quick, high value, high quality, responsive, and personalized. These core principles must permeate everyday culture.

4.  Execution matters...a lot

The ability to execute is not inherent among all leaders. When it comes to payment transformation and complex change, it is often assumed that that a critical change can be “assigned” – and that is flawed thinking. Masterful execution requires process, project, and conflict management, as well as sharp communication skills, and most importantly, the ability to influence others. Time and again, seemingly good ideas are lost on poor execution. Payment reform becomes the impetus for care delivery reform which is a heavy lift. Simplifying the plan and managing the execution process will keep you on path to smart execution and foster the commitment to change.

5.  The imperative to adopt new payment models

Bundled payments are a natural introduction to value-based care delivery as the entry point is low, the investment is lower than ACOs by comparison, and the yield can be high. Certain other shared savings models with payers as your partner can also yield results in a relative “safe” environment. Bundled payment programs are moving out of the pilot stage and are becoming an integral part of healthcare finance in many markets. Many of the pilot initiatives focused on inpatient hospital stays and physicians performing procedures in high cost, high volume specialties like orthopedics and cardiology. Bundles are expanding across the care continuum into both the outpatient and post-acute arenas. Also, we are seeing many new joint venture arrangements with payers to facilitate population health management experience in commercial, Medicare, and Medicaid markets. The point is, successful leaders are pursuing new payment models rather than shying away.

6.  The next “dream deal" (Hint: It’s not a volume play)

No healthcare provider or setting is an island. The kind of thinking that connects cross-setting care delivery will change the world of healthcare in the United States. The next dream deal can be summarized in one word: Partnership. Successfully managing risk under the evolving reimbursement structures requires organizations to look beyond their four walls for partners to complete the care continuum, provide new capabilities, and live up to the goal of delivering patient-centered care. Partnership evaluation efforts across multiple healthcare stakeholders must be fact-based through a comprehensive market assessment. In a perfect world, who do you see as your long-term partners? What partnerships have you not considered that you should? Are you philosophically aligned with this potential partner? Are their practitioners and executive staff well aligned with yours? How do they perform on cost, quality, and customer satisfaction metrics, as well as key metrics like readmission rates, compared to their peers? Asking the key questions early will prevent the dream deal from becoming a nightmare.

7.  Failure tolerance as a leadership best practice

Managing “fusion” reimbursement models requires an understanding that innovation is the hardest work to do, and failure is not failure at all--rather, it is just a data point on the journey to transformation. Failure cannot be personalized, and future leaders understand the need to “roll with it” and move quickly through tests of change. Tomorrow’s healthcare leaders are “disruptive innovators” who do not subscribe to a “culture of nice,” are not afraid to fail, and are not constrained by the political implications of killing a bad project. These leaders view failure as merely new information and are already on to the next innovation. In order to effectively compete in a time of industry transformation, the really great leaders, those capable of transforming organizations, will demonstrate a high degree of failure tolerance.

8.  The courage imperative

The healthcare leaders who will survive understand that courage and bravery shape the kind of thinking needed to spur payment transformation. Transforming the way care is delivered is not an overnight exercise and requires extraordinary courage. This includes saying “no” to unsustainable cost structures, but not through slash-and-burn tactics, which are largely short-term fixes. Success with bundled payments or any risk-based reimbursement model requires the courage to speak truth to waste and duplication and resulting behaviors of fee-for-service.

9.  Proximity

Assumptions underlying collaboration and innovation are changing. The collaboration and innovation necessary to thrive during the payment reform mash-up do not happen over conference calls or in cubicles. Chance cafeteria encounters and hallway conversations are strategic opportunities to break down silos and achieve break-through care transformation. There is a natural rhythm to collaboration that is rooted in trust and transparency. Smart leaders are asking themselves how to best foster, enable, and invest in proximity. Face-to-face connections, often occurring on the front-lines, are communication tools, and innovation sessions must be promoted.

Cross-discipline, cross-setting collaboration is the vehicle that enables innovation. Tomorrow’s successful leaders demonstrate a unique ability to collaborate, even when it means partnering with their “frenemies.” It is not personal, nor is it about burying the competition. It is about promoting and achieving health in the community. That said, collaboration done poorly can lead to endless meetings and costly delays. Being open, intuitive, and deliberate about how and when to collaborate has never been more critical for healthcare executives.

10.  Payment reform best practices are still evolving

“First Generation” transformation is not the end game; however this does not give an organization a “pass” to do nothing. The devil is in the details. Methodologies are being refined and improved. Care patterns are being altered. Transparency in healthcare is increasing exponentially. Payers and providers alike want an industry standard defining the “new normal” that outlines those best practices and makes this transition straightforward with clear timelines. Those organizations that choose to embrace payment reform now have the ability to help lead and shape the future of what those best practices look like.

As we have seen in other industries, such as the rise and fall of the dotcom era, true leaders must accept nothing less than breakthrough innovation and must understand that technology will never replace the importance of high-quality relationships grounded in trust, courage, collaboration, and innovation. Actively, energetically, yet thoughtfully pursuing new payment models, such as bundled payments, offers current leaders a wonderful sandbox to implement innovative strategies today that will enable them to thrive tomorrow.

Bundled Payments, Payment Reform, Deirdre Baggot, The Camden Group




Ms. Baggot
is a senior vice president at The Camden Group. baggot_headshotShe is a nationally recognized thought leader in bundled payments and was selected by CMS and the Innovation Center to serve as an expert panelist in Models 2 and 3 application reviews for the Bundled Payments for Care Improvement initiative. She may be reached at dbaggot@thecamdengroup.com or 303.335.7047.

hartsfield_headshotMs. Hartsfield
is a vice president with The Camden Group. She specializes in payment transformation strategies with a focus on designing and implementing Medicare and commercial bundled payments. She frequently presents on a variety of topics including value-based payment models and provider engagement. She may be reached at khartsfield@thecamdengroup.com or 501.940.2526. 
 
 

Topics: Payment Reform, Bundled Payment, Deirdre Baggot, Kimberly Hartsfield, Payment Models

Subscribe to Email Updates

Value Model, Health Analytics

Posts by Topic

Follow Me