Objective 1 - Provider Reimbursement - SN102-13 - Bundled Payments

Question 1

Developments with Bundled Payments

Answer 1

1. Bundled payments for care improvements Initiative
   
   1. Used for Medicare
   2. 4 Options
      
      1. Retro acure care stay only
      2. Retro Acute care and Post acute care
      3. Retro Post acute care only
      4. Prosp Acute care stay only
2. CMS Pilot programs
3. Medicare ACE Demonstration
   
   1. Focus on hip and knee replacements
   2. Payment basis - Part A and B services and preadmission testing, post op care excluded
   3. Shared savings program

Question 2

Bundled Payments vs FFS

Answer 2

1. Creates an opportunity to reduce claim costs for services within the bundle - payer perspective
2. Creates and opportunity to reduce expenses, improve delivery system integration and increase profit margin - payer perspective

Question 3

Reasons for using Bundled Payments

Answer 3

1. Providers
   
   1. attract more business including self pay
   2. engage physicians, especially surgeons
   3. gain cooporation of physicians to reduce hospital costs
2. Payers
   
   1. reduce payments
   2. encourage patients to use lower cost, higher quality providers
3. Help align financial and quality of care initiatives

Question 4

Considerations in contracting for bundled payments

Answer 4

1. Defining the episode - what is the trigger date and when does the case end? Which services are included? 2. Evaluating catastrophic risk - need to do an outlier risk analysis that includes a classical stop loss analysis 3. Financial stability for low case loads - random fluctuation may be greater for provider groups with low case loads 4. Determining provider allocation of funds - the allocation should consider financial incentives for physicians to encourage them to promote more cost-effective care 5. Distinguishing case severity - could limit risk by removing higher-severity patients from the bundled payment approach 6. Quality outcome requirements - minimum quality thresholds may be needed to ensure quality is not compromised as providers reduce services 7. Administrative complexity of supporting the contract 8. Risk-sharing alternatives - contracts that share financial risk between the provider and payer may be more viable than pure bundled payments 9. Potential for increased utilization - contracts for individual providers should not give them incentives to increase utilization to get a larger share of the bundled rate

Question 5

Success Factors for Bundled Payments

Answer 5

1. Ability to discharge to the appropriate path of care
2. Rehab facilites are highly valued