By Laura Thill
The goal of bundled payments is coordination of care across acute- and post-acute-care sites, and sales reps can help.
Few would dispute that post-acute care represents an opportunity for providers to reduce spending while focusing on better quality care. The Centers for Medicare and Medicaid Service bundled payment program is a start to addressing this issue. Understanding bundled payment may present a learning curve for distributor sales reps, but one that should lead to a stronger relationship with their post-acute care customers.
Understanding the basics
Much has been written on the subject of bundled payments, and while the programs are new and still evolving, it’s important for reps to understand some main points. “The Centers for Medicare & Medicaid Services (CMS) is testing two major bundled payment models within Medicare,” says Eric Cohen, vice president of business development, McKesson Medical-Surgical. “These include the Bundled Payment for Care Improvement (BPCI) model, which is voluntary, and the Comprehensive Care for Joint Replacement Model (CJR), which is mandatory.”
As of January 2016, over 1500 providers were participating in BPCI. (See related article.) “Under this program, the bundle holder – or the provider responsible for total episodic spending – can be either an acute care hospital, a physician group practice or a post-acute care provider (including skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency),” Cohen explains. “Participants can select to receive bundled payments for one or more of 48 clinical conditions, including orthopedic, cardiac and other conditions.”
CJR – the first mandatory bundled payment model – requires the participation of all acute care hospitals in 67 selected Metropolitan Statistical Areas (MSAs) and applies only to cases of major joint replacement of the lower extremity (MS-DRGs 469 & 470).
The CJR model aims to support better and more efficient care for Medicare beneficiaries undergoing the most common inpatient surgeries – namely hip and knee replacements, according to Lisa Thomson, chief marketing and strategy officer, Pathway Health. “This model [is designed] to encourage hospitals, physicians and post-acute-care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery,” she says. “Hospitals will be incentivized to partner with post-acute-care providers who provide high quality care at reasonable cost.
“Under these bundled payment models, providers continue to bill Medicare and receive regular payments under fee-for-service,” says Cohen. “Once an episode is over, CMS reconciles total episodic spending against a target price, which typically is based on the provider’s historic spending.” (CJR incorporates regional pricing later in the model.) If the bundle holder’s claims have exceeded the target price, it owes CMS the difference. If the bundle holder’s claims are lower than the target price, CMS owes the bundle holder the savings between the actual claims.
“All post-acute-care providers are impacted by payment reform and value-based purchasing models, [making it especially important for] sales reps to understand all of the various bundling programs currently in place in Medicare and the impact they will have on their customers,” Cohen points out. Reps should focus on transitioning their interaction with providers from transactional (focused on the products they are selling) to consultative, he adds. It will be more important than ever to provide customers with policy updates, insights and support services to help them use products effectively and efficiently to succeed under bundled payments.
Although CMS has yet to determine when the bundled payment program will move beyond the pilot phase and become mandatory nationwide, Thomson anticipates the “current mandatory bundle will be expanded with adjustments across the country, along with new test bundles.
“There is thought that there are other disease state bundles that will be introduced within the next few years,” she continues. “It is important that all providers understand that value-based payment models, including bundled payment, are continuing to roll out across the nation.”
Meeting the challenge
Providers looking to participate in a bundled payment model must meet specific criteria, as well as contract with a convener, or a CMS-approved organization that oversees up to 48 disease states and agrees to specific parameters, financial risk and performance measures, Thomson points out. “These arrangements began with no financial impact and are now in phase II, in which the risk agreements that they contract will impact their operational outcomes,” she explains.
At the same time, all providers currently participating in the bundled payment program must ensure the following, notes Thomson:
- Safe and coordinated care transitions across provider types
- Agreed-upon clinical pathways across provider types
- Coordinated care
- Standardized performance metrics
- Data tracking
- Reconciliation of data to align with incentive payments
- Base payment
- Cost control
- Collaboration of services and supplies
- Financial risk adjustments, limits and outliers beyond the provider’s control
In addition, “providers need to determine operational readiness for the new payment models,” says Thomson. “[They must] determine clinical capacity, capabilities and competencies around the disease state bundles; review, benchmark and align organization data; and create a business case/value proposition [showing] why they [should] be considered a preferred provider in the new payment models.
“Bundled payment models ideally place the patient with their physician in the center of care, thus creating a collaborative versus silo approach to care and service delivery,” she continues. “If a provider can demonstrate performance outcomes, quality care experience and a positive patient experience, the opportunities are endless in the new payment models. Post-acute-care providers need to re-imagine and redesign care delivery and processes to align with the new quality expectations and payment redesign.”
As bundled payment programs continue to expand across the country, they likely will have a direct impact on the buying trends of post-acute-care providers, notes Thomson. “It will become increasingly important for reps to understand the current risk arrangements that their customers are contracted with – whether it is BPCI, PPN, ACO, Next Gen ACO, MSSP or others. Increased quality outcomes and expectations, the need for onsite diagnostic capabilities within an organization’s licensure requirements, and formulary adherence-per-bundled clinical practices are some of the initial buying changes that are [being] realized.”
Here to Stay
Shifts in payment plans are not a passing fad, note experts. Now is the time for sales reps to position their product portfolios.
By Laura Thill
If sales reps had any doubts about the Centers for Medicare and Medicaid Services’ bundled payment program moving forward, they should rest assured, it’s here to stay, according to Andrew E. Van Ostrand, vice president, Care Continuum/Extended Care, Medtronic. Particularly as CMS’s focus shifts to a home health environment, the emerging payment models will continue to impact the post-acute care market. “Now is the time to know and understand the new payment models – what the differentiators are and how these new models will impact customers,” he says.
“Up to this point, the focus has been on individual markets,” Van Ostrand continues. But, that’s quickly changing to a focus on a continuum of care. As such, “distributor sales reps should think about their portfolios: What government protocols are being put into place, and how will they impact their portfolio? [Furthermore], what are the quality and financial incentives for hospitals and post-acute-care providers moving forward?”
As payment barriers are broken down, and providers share bundled payment, sales reps will need to consider how this will impact the products they offer, as well as how they market these products to their customers. “As CMS continues to identify ways to bundle money (e.g., around joint care, etc.), sales reps will need to ask themselves, ‘What products can we offer to help our customers take advantage of new payment incentives?’” That’s not to say providers won’t need the same products they have in the past. But, sales reps must now bundle their products differently, he adds.
Van Ostrand predicts that market changes such as bundled payment will lead providers to look to a small group of focused suppliers who can meet their needs. The shift from volume-based payment to value-based payment is making it more important than ever before for sales reps to focus on consultative – rather than transactional – selling, he points out. To do so, distributors will need to align themselves with their manufacturer partners, who can help them position their portfolios appropriately, he adds.
“2016 will represent some big market shifts,” he says. “If you’ve been tuning out the noise, you can no longer do so.”
Bundled Payments and the Perioperative Surgical Home
Joint replacement procedures are initial focus
Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries and can require lengthy recovery and rehabilitation periods, according to the Centers for Medicare & Medicaid Services. In 2014, there were more than 400,000 procedures, costing more than $7 billion for the hospitalizations alone. Despite the high volume of these surgeries, quality and costs of care for hip and knee replacement still vary greatly among providers.
That’s one reason why CMS is eager to begin a bundled-payment program for hip and knee replacements. And that also explains why the American Society of Anesthesiologists and Premier Inc. have focused on joint replacements in their Learning Collaborative on the Perioperative Surgical Home – a patient-centered, team-based practice model of coordinated care that guides patients through the entire surgical experience, from the decision to undergo surgery to discharge and beyond.
On April 1, 2016, CMS was scheduled to launch the Comprehensive Care for Joint Replacement (CJR) model, in order to test bundled payment and quality measurement for an episode of care associated with hip and knee replacement. The purpose is to encourage hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery.
CMS hopes the alternative payment model will contribute to the Medicare goals set by the Obama administration of having 30 percent of all Medicare fee-for-service payments made via alternative payment models by 2016, and 50 percent by 2018.
The CJR model will hold participant hospitals financially accountable for the quality and cost of a CJR episode of care, and will incentivize increased coordination of care among hospitals, physicians, and post-acute care providers. The episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities), and ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries.
The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with the exception of certain exclusions.
Editor’s note: For more information on the American Society of Anesthesiologists Perioperative Surgical Home, go to https://www.asahq.org/psh
Bundled Payments for Care Improvement
More than 1,500 healthcare providers are involved in Phase 2 of CMS’s Bundled Payments for Care Improvement (BPCI) Initiative, in which providers assume financial risk for episodes of care. CMS defines an episode of care as the set of services provided to treat a clinical condition or procedure, such as a heart bypass surgery or a hip replacement.
The breakdown of participants by provider type is as follows:
- Acute care hospitals: 409
- Skilled nursing facilities: 700
- Physician group practices: 288
- Home health agencies: 100
- Inpatient rehabilitation facilities: Nine
- Long-term-care hospitals: One
Bundling payment for services that patients receive across a single episode of care is one way to encourage doctors, hospitals and other healthcare providers to work together to better coordinate care for patients, both when they are in the hospital and after they are discharged, according to CMS.
BPCI includes four models of bundled payments tied to inpatient hospital admission. The models vary by the types of providers involved and the length of the bundle after the hospitalization. They are:
- Model 1: The episode of care is defined as the inpatient stay in the acute care hospital. Medicare pays the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare continues to pay physicians separately for their services under the Medicare Physician Fee Schedule.
Models 2 and 3 involve a retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care. Medicare continues to make fee-for-service (FFS) payments; the total expenditures for the episode are later reconciled against a bundled payment amount (the target price) determined by CMS. A payment or recoupment amount is then made by Medicare reflecting the aggregate expenditures compared to the target price.
- Model 2: The episode includes the inpatient stay in an acute care hospital plus the post-acute care and all related services up to 90 days after hospital discharge.
- Model 3: The episode of care is triggered by an acute care hospital stay but begins at initiation of post-acute care services with a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency.
- Model 4: CMS makes a single, prospectively determined bundled payment to the hospital that encompasses all services furnished by the hospital, physicians, and other practitioners during the episode of care, which lasts the entire inpatient stay. Physicians and other practitioners submit “no-pay” claims to Medicare and are paid by the hospital out of the bundled payment.
For more information about CMS’s Bundled Payments for Care Improvement Initiative, including identification of participating providers, go to https://innovation.cms.gov/initiatives/bundled-payments