Archive for the ‘Bundled Payments’ Category

Majority Back Medicare Timeline for Value-Based Reimbursement

January 29th, 2015 by Patricia Donovan

For the first time in Medicare history, HHS has set explicit goals for alternative payment models and value-based payments.

The healthcare industry took notice earlier this week of Medicare’s ambitious timeline for moving Medicare payments from volume- to value-based models—an agenda validated by the majority of respondents to HIN’s eleventh annual Healthcare Trends and Forecasts survey.

Ninety-two percent of respondents to the December 2014 survey endorsed healthcare’s transition to rewarding healthcare value and quality over volume of services, noting the trend has boosted accountability and revenues.

In a related data point, 26 percent view the adoption of value-based reimbursement and rewards as the most promising area of healthcare.

The HHS timeline will tie 30 percent of traditional or fee-for-service (FFS) Medicare payments to quality or value through alternative payment models by the end of 2016. Alternative payment formulas include accountable care organizations (ACOs), patient-centered medical homes (PCMHs), and bundled payment arrangements for episodes of care, which CMS has tested in a range of pilots in recent years.

The HHS said it will tie 50 percent of payments to these models by the end of 2018. In 2011, Medicare made almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments.

With views toward value-based reimbursement mostly favorable, 2015 Trends survey respondents shared some spoils of a value-over-volume approach:

  • „„“Higher levels of accountability in order to be well positioned to execute in a value environment.”
  • „„“As a high quality provider, shift to rewarding this behavior has increased revenue.”
  • „„“Not as much direct impact as implied and perceived focus on quality and reporting.”
  • „„“We built a provider network upon this principle.”

In other trends documented by the survey, declining reimbursement and cost constraints posed considerable challenges for respondents in the last 12 months, while interventions to tighten transitions in care, reduce hospital readmissions and integrate care via the patient-centered medical home (PCMH) model—all value-based initiatives—were among business successes recounted by this year’s participants.

3 Factors Driving Healthcare’s Transition from Volume to Value

December 9th, 2014 by Patricia Donovan

Long term, the healthcare industry’s well-documented transition from a value-based system to one that rewards value will ultimately promote consolidation in the industry, putting some companies out of business while making consumers more accountable for their care, predicted Steven Valentine, president of The Camden Group, during HIN’s eleventh annual healthcare trends forecast.

But how rapidly will the market complete this transformation? Valentine shares three factors that will impact the change.

People always say how fast our market will change. There are three factors to consider as the market transitions from volume to value.

The first is the time frame for the transition. Driving the time frame are concerns such as competitors’ activities, payor payment models (capitation, shared savings, case rates). What is going on in payor models that will help move the market? Another driver is managed care penetration. Some parts across the country have little to no managed care penetration. Those will be areas with lower change in terms of that market.

The second factor is the delivery system change. Impacting this is the physician-hospital economic alignment. We look for contiguous geography. A hopscotch strategy doesn’t work very well for transitioning the market. We look at the integration along the continuum, starting with doctors through a minimum, then the ambulatory and acute area. Our belief is that this year, post-acute begins to show up. We see most of the money that can be made in bundled payment really comes from a longer period of time to be at risk: 90 to 120 days. We find it in the post-acute care arena to save the money. Other drivers for change in the delivery system include the use of population health tools (PCMH, ACOs and chronic care centers), as well as clinical integration.

Finally, we look at the payment system—incentives, pay for performance, shared savings—any value-based purchasing programs put in place. You will need to take risks. Organizations that take risks, especially well organized medical groups, will help to drive a market and the transition to value much more quickly.

healthcare trends 2015
Steven T. Valentine, MPA, is president of The Camden Group, a national healthcare management consulting company. With more than 35 years of healthcare consulting experience, he has considerable expertise in the areas of strategic planning, business transactions, mergers, hospital-physician relationships, and financial analysis.

Source: Healthcare Trends & Forecasts in 2015: Performance Expectations for the Healthcare Industry

Healthcare Trends 2015: Transparency, New Players Narrow Payor-Provider Divide

November 20th, 2014 by Patricia Donovan

Trends 2015
To paraphrase Bob Dylan: Healthcare roles, they are a’ changin:’

For example:

  • Providers are moving into payor spaces, assuming care coordination roles.
  • Payors are expanding into provider businesses.
  • Hospitals are being repurposed as post-acute care centers.
  • Empowered consumers are diving into data analytics for cost and quality information.
  • Innovators launching new care models abroad are poised to test them on U.S. soil, turning healthcare into a global market.

Given these role reversals and emerging players, the challenge of distinguishing oneself organizationally in the marketplace is a formidable one. Healthcare payors and providers received targeted advice for achieving this goal during Healthcare Trends and Forecasts 2015: A Strategic Planning Session.

And as Dorothy Moller, a managing director at Navigant, and Steven Valentine, president of The Camden Group, both attested to during the eleventh annual planning session from the Healthcare Intelligence Network, the biggest threat may come from outside the industry.

“Payors are experiencing new threats to their core business from new market entrants and competitors,” noted Ms. Moller, who offered the payor perspective. “Those could be anything from new health plans to new technology companies or companies chipping away at components of their core business, offering new services or decision-making tools to their existing customers.”

Walgreen’s retail clinics were on Ms. Moller’s list of nine such companies to watch in 2015. Similarly, Walmart’s venture into Direct Health is one example of a ‘disruptive strategy,’ contributed Valentine, representing the providers’ viewpoint. “We begin to see what direct health is doing. Walmart is getting people in their stores because they still sell goods. What happens when Walmart acquires a health plan or starts to offer its own healthcare products? If we think of some disruptive strategy, you might look at what a Walmart would do.”

Within the marketplace, Vivity, Anthem Blue Cross’s new, low-cost, patient-centered Southern California health plan that targets employers, is challenging Kaiser Health Plan for market share, added Valentine. Similarly, health plans are also threatened by ‘disintermediation,’ offered Ms. Moller— the movement of payors out of the value exchange, such as in the case of direct primary care.

Both thought leaders analyzed factors driving healthcare change, including the steady shift toward value-based reimbursement, changing healthcare delivery models and the increasing reliance on remote patient monitoring, then outlined areas ripe for potential innovation and growth.

While each proposed sector-specific coping strategies, payor-provider integration, collaboration and partnerships were also strongly encouraged.

Pressure for increased transparency also is taking its toll, with myriad sites and sources offering healthcare cost and quality data. “Healthcare systems can look at their competitors. They can get a sense of pricing in their market,” said Valentine, who advised providers to focus on pricing now in anticipation of increased awareness by 2016 and 2017, when he expects more states to include claims and pricing in exchanges.

“We used to say that healthcare was recession-proof; we now know healthcare is price-sensitive,” he said. “People’s copays and deductibles have grown enough that consumers will shop price.”

Ms. Moller advises payors to proceed carefully when considering new development. Her suggestions include collaborations with non-traditional industries, conducting long-term strategizing, and monitoring the global market.

In the closing Q&A, Ms. Moller and Mr. Valentine addressed more 2015 concerns, including the anticipated impact of Chronic Care Management reimbursement. Hospice and palliative care will likely be affected by the updated 2015 Physician Medicare Fee Schedule, predicted Valentine, who views chronic care management as a critical focus for healthcare providers in the year ahead.

“The area in which we see the most growth, and where we’ll see continued growth in 2015, is in the center for chronic care management. For example, we identify a diabetes care team, which is the diabetes center for chronic care. We find this is better in terms of using a multi-disciplinary team and it improves throughput for the primary care patient-centered medical home (PCMH).”

Commenting on impact from the numbers of newly insured on the system, Ms. Moller responded it is still too early to see the true effect, due to slow implementation and a claims lag.

For more provider predictions from Steven Valentine, including a surge in telehealth, e-visits and physician-hospital organizations, click here.

To listen to Ms. Moller’s expectations for payors in the year ahead, including co-located care management and progress by safety net payors, click here.

Have predictions of your own? Our 10 Questions on 2015 Healthcare Trends Survey runs through December 13. One winner who completes the survey will be eligible to win an on-demand recording of the 2015 strategic healthcare planning session described in this post.

Strong Signals Favor Bundled Payments to Reduce Cost of Care

October 21st, 2014 by Patricia Donovan

Besides piloting the use of bundled payments to enhance healthcare quality and efficiency, CMS’s 2013 introduction of CPT codes for physician management of care transitions after discharge signals the federal payor’s increased comfort with episodic-based reimbursement. Jay Sultan, associate vice president and chief product portfolio architect for TriZetto® offers his perspective on the future of bundled payments in healthcare.

Healthcare is such a cyclical industry. Anybody who says this is the new movement and it’s here to stay has a better ability to read the future than I do.

I believe that bundled payment is going to continue to increase adoption. And then I think we’ll see a pullback in rate of adoption that will be caused by two things: one will be just the fact that we’ll have picked off all the low fruit, and what’s left is harder. I’m sure there’s somebody out there who wants to do a bundle of fibromyalgia, but I don’t want any part of that. The second reason they’ll pull back is because they’ll learn some negative lessons.

One of the things about payment bundling to date, at least in the prospective payment bundling (think model four of the CMS program), is that many commercial programs are just getting started right now. One lesson to date is there just are no negative examples. There’s negative examples in retrospective payment bundling. For prospective payment bundling, we haven’t had failures yet. Those are inevitable and they’re going to come. And as they come, I think that will create a somewhat inhibiting effect.

But overall, it’s hard to imagine. What payment bundling does is change the inner purchase. We’re saying, we’re tired of buying CPT codes of services. Instead, we want to start buying longitudinal care as an episode, as a bundle. And that trend is exactly where capitation takes them, exactly where partial capitation takes us. It’s where our provider-run health plans take us. It’s just another point along the continuum of how much risk providers are taking.

I don’t think bundled payments are going to go away. CMS is signaling very, very strongly that this is part of its future, for a basic reason. It’s one of the few tools it has that can actually reduce the cost of care. For those who think that this is going to go away, I’d harken you back to the onset of DRGs. Today, DRG-based care is pretty pervasive. But it certainly doesn’t cover all of care. It doesn’t even cover all of hospital care. It doesn’t cover all of CMS hospital care.

value-based reimbursement
Jay Sultan is the associate vice president and product manager for value-based reimbursement at TriZetto®. With more than 12 years of consulting and development experience in the payer and hospital settings, Sultan is responsible for developing innovative solutions such as payment bundling and other forms of value-based reimbursement. He is also providing leadership on the adoption of clinical analytics into TriZetto solutions.

Source: Value-Based Reimbursement Answer Book: 97 FAQs on Healthcare Models, Measures and Methodology

4 Factors Driving Resurgence in the Physician-Hospital Organization Model Today

October 10th, 2014 by Cheryl Miller

As healthcare organizations seek the infrastructure to respond to emerging payment models like accountable care organizations (ACOs), bundled payments, narrow networks and direct contracts, the physician-hospital organization (PHO) model is experiencing a resurgence nationwide.

But will it work this time? Four factors make the PHO attractive, says Travis Ansel, senior manager with the Healthcare Strategy Group, during Preparing for Value-Based Reimbursement Models: PHO Development for ACOs, Bundled Payments and Direct Contracting, a 45-minute webinar from the Healthcare Intelligence Network (HIN) now available for replay.

The first most immediate driver is independent physician alignment, says Mr. Ansel. While most markets are mature in terms of employment, there are still a number of markets where there are a significant number of independent physicians in key specialties. In these areas, the PHO model is more of an initial catchall type of alignment model, one that creates a loose tie between the hospital and the physicians in the market, and provides value to the physicians in terms of being protected as part of a larger group without having to become employed. One benefit for the hospitals is that they can align independent physicians en masse and create common incentives, instead of having to negotiate alignment models or arrangements with all independent physicians in their market.

The second driver is the increasing mutual accountability for quality and cost across providers. In the wake of transitioning payment models under payment and insurance reform, insurers and payors are trying to drive mutual accountability for patient costs to physicians and hospitals. The PHO is an appropriate response for those providers to work together to manage the cost of a population and of an episode of care in order to make sure everybody’s successful.

The third factor driving resurgence in PHO activity is the consolidation and distribution of resources that will allow providers to be successful in managing quality and cost. As healthcare reform and payment reform mature, information technology (IT) competencies, clinical competencies, care coordination practices, and exploring the patient-centered medical home (PCMH) concept are often unrealistic at the individual practice level. The PHO gives physicians and hospitals the platform to work on those care competencies together, build them in one place and then distribute them to PHO members — a “win-win for everybody,” Mr. Ansel says.

The final driver is the need for an effective framework for clinical integration. While there are already a number of clinically integrated organizations around the country, “For the bottom 90 percent of healthcare organizations in the country, clinical integration is still that thing that’s on our to-do list, but it always gets bumped to the back of the to-do list; because, we have more immediate needs, or more immediate strategic priorities,” Mr. Ansel says. Clinically integrated models are needed as a strategy to respond to payment reform, to allow joint contracts between physicians and hospitals, and to enable sharing of payments effectively, whether those are shared savings payments, bundled payments, etc. Adds Mr. Ansel:

“The PHO model provides a great initial step to building that clinically integrated network platform, and gives providers and the hospital a great model for working together to start building the competencies towards a clinically integrated network.”

Click here for an interview with Mr. Ansel.

Bundled Payments Opportunity to Practice Proactive Population Management

September 16th, 2014 by Patricia Donovan

Assuming financial risk for the cost of post-acute services not only helps healthcare organizations avoid value-based readmissions penalties but also provides a chance to proactively manage a population, notes Kelsey P. Mellard, vice president of partnership marketing and policy with naviHealth.

We have been called almost a concierge-type service in the way we think about management and engagement with the patient, their family, and their caregivers. We proactively provide a road map to our beneficiaries based on their functional score. Our tools and technology identify their functional abilities upon discharge from the hospital and use that as a driver for identification of a post-acute care setting.

Our functional score is comprised of three domains: basic mobility, applied cognition and daily living skills. Through the assessment of the patient, we identify a patient in our database just like the patient in front of us and say, ‘Patients just like this patient have gone to skilled nursing facilities (SNFs) or home health and have had this level of functional improvement over the course of this length of stay, this many therapy hours per day, and this patient presents with X% of a risk for readmission. Through that prediction, based on historical real patients in our database, we can identify and help target the level of acuity and care this patient actually needs in a post-acute care setting.

Often we discharge patients to a higher level of acuity and care than they actually need. This gives us a tool. It’s not a rule. It’s not the be-all, end-all in our hospital partner settings, but it does create another piece of information based on real patients to help inform the discharge planning process.

We see the level of excitement and engagement our hospital partners exhibit on the ground floor, because right now they’re discharging based on community knowledge or because a case manager really likes one facility or they’re financially interested, from an organizational standpoint, in one facility. This negates all of those conversations and says this is an evidence-based model we’re going to be able to deliver at the bedside.

Source: Bundled Payments: Opportunities in Effective Retrospective Acute and Post Acute Care Bundles

Bundled Payments


Bundled Payments: Opportunities in Effective Retrospective Acute and Post Acute Care Bundles
First quarter experiences from these pilot programs, along with the current bundled payment opportunities for organizations not yet participating in CMMI’s pilot program.

2014 Value-Based Priorities: Population Health, Care Coordination, Integrated Care

July 3rd, 2014 by Cheryl Miller

From an early surge in Medicare accountable care collaborations (ACOs) to the problematic rollout of the nation’s historic health insurance exchanges during a 16-day government shutdown, healthcare in 2013 was nothing short of unpredictable. Respondents to HIN’s tenth annual Healthcare Trends and Forecasts survey identified a trifecta of value-based priorities for 2014, deeming population health management (56 percent), care coordination (51 percent) and integrated care delivery (42 percent) initiatives most worthy of their attention in 2014.

In tandem with these Triple Aim priorities, respondents also selected the accountable care organization (ACO) as the care delivery model most likely to transform healthcare, from both cost and care delivery perspectives. The patient-centered medical home has held this distinction for the last two years.

Some key findings from the survey include the following:

  1. The top business areas affected by the 2013 economy were growth (65 percent, still the top area but down from 72 percent in 2012); hiring and recruitment (65 percent); capital improvement (48 percent); and service expansion (43 percent).
  2. The top five factors impacting healthcare business in 2013 were not limited to purely financial issues as they have been in recent years: budget constraints (42 percent), the Affordable Care Act, or ACA (30 percent), reimbursement (28 percent), care transitions (27 percent), and the economy (25 percent).
  3. Beyond the ACO and the patient-centered medical home (PCMH), the care delivery systems with the most transformational potential were comprehensive primary care (19 percent) and bundled payments (11 percent).
  4. Beyond population health management, care coordination and integrated care delivery, the areas of healthcare most ripe for development are e-health and telehealth (39 percent), access to healthcare (33 percent), health and wellness (26 percent) and dual eligibles (25 percent).
  5. Impacts from continued rollout of ACA initiatives in 2014 include (in respondents’ own words): expansion of customer base from implementation of physician ACO and bundled payment programs; reduced reimbursement, requiring more efficiency and cost reductions; the challenge of delivering primary care services with improved outcomes and transparency in reporting; and revenue streams created by exchanges, along with a need to add primary care practitioners.

Excerpted from Healthcare Trends & Forecasts in 2014: Performance Expectations for the Healthcare Industry.

Snapshot of CMS Bundled Payment Care Initiative

July 1st, 2014 by Patricia Donovan

From both transparency and best processes standpoints across the entire nation, post-acute care presents an incredible opportunity to streamline not only the staging but also the quality of care provided to Medicare beneficiaries, notes Kelsey Mellard, vice president of partnership marketing and policy for naviHealth, a convener for Models 2 and 3 of the CMS Bundled Payment Care Initiative (BPCI).

Bundled payments touch four opportunities to engage providers in various settings. Model 1 is for retrospective acute care episodes, which focus only on the acute hospital stay. Model 2, which is where naviHealth is most engaged to date, is retrospective acute care hospitals plus the post-acute care. Our goal is building alignment—not only financial alignment but also quality alignment across both the hospital and the post-acute care settings, regardless of whether it’s a home health agency, a skilled nursing facility (SNF), an inpatient rehabilitation facility (IRF) or a long-term care hospital (LTCH). With model 3, we just have the episode focused on the retrospective post-acute care only. Finally, model 4 is for acute care hospital stays only.

Within these four models to date, we’ve seen over 300 organizations sign up and be active in phase 2, which means that they are in the risk-bearing phase. They are financially bearing risks for an episode based on the target sites that CMS has generated. Primarily, the 300 are split between Model 2 and Model 3. The first model, retrospective acute, is most active in the New Jersey market, model 4 has a few hospitals that are scattered throughout the country.

NaviHealth went live focusing on model 2 for a couple of reasons in January 2014, with 11 hospitals in five states. We will expand again in October and will further expand starting January 1, 2015, given the time frame that CMS has allowed us to continue our expansion and our partnerships as an awardee convener.

CMS is keenly focused on the variation of post-acute care, based on the most recent Institute of Medicine (IOM) report stating that if regional variation in post-acute care did not exist, we would see Medicare spend variations fall by 73 percent.

From a transparency standpoint and from a best processes standpoint across the entire nation, post-acute care has an incredible opportunity to streamline not only the staging, but also the quality of care provided to Medicare beneficiaries.

Excerpted from: Bundled Payments: Opportunities in Effective Retrospective Acute and Post Acute Care Bundles

Remote Care Management Improvements As Close As Telephone

June 3rd, 2014 by Patricia Donovan

Telephonic care management leads the list of remote patient monitoring strategies.

Remote patient monitoring in all its embodiments is here to stay, as results from our 2014 survey validate, with everything from interactive voice response (IVR) to video visits to home sensors driving results in population health management, particularly for the frail elderly.

Even CMS shows signs of softening its stance toward telemedicine. A key provision of a May 2014 rule issued by the Centers for Medicare and Medicaid services removed some barriers surrounding the umbrella issue of telehealth. In particular, this rule reduced the burden on very small critical access hospitals, rural health clinics and federally qualified health centers (FQHCs) by no longer holding physicians hostage to a prescriptive onsite schedule. This provision addresses the geographic barriers and remoteness of many rural facilities, and recognizes telemedicine improvements and expansions that allow physicians to provide many types of care at lower costs, while maintaining high-quality care.

More of these concessions are likely to come as the industry embraces value-based care and the market for devices to track home-based biometrics and activity continues to explode.

But sometimes, it’s not the clinical emergency averted by the use of remote monitoring but the assurance provided by a simple phone call. Analytics by naviHealth, a convener in the CMS Bundled Payments pilot, identified healthcare utilization patterns by the elderly that might benefit from telephonic care management.

“Often we found that some of our beneficiaries re-admit [to the hospital] because they simply want social interaction with someone else. A telephone call can sometimes be gratifying enough for that beneficiary so that they’re not seeking social engagement back at the hospital again,” notes Kelsey Mellard, vice president of partnership marketing and policy with naviHealth.

“If you think about how you target your population, you have high risk, low risk and maybe medium risk, depending on your analytics and clinical team. This is not rocket science,” Ms. Mellard continues. “It is a lot of work. It’s a lot of use of analytics against a target, but once you’ve identified that target population, it’s a question of how to turn up the engagement or turn down the engagement based on where that patient is. ”

“It can be very simple telephonic care management in the form of brief conversations,” she concludes.

Excerpted from 2014 Healthcare Benchmarks: Remote Patient Monitoring

Profiting from Payment Bundles: Post-Acute Care Presents Opportunities

June 2nd, 2014 by Patricia Donovan

On the landscape of opportunity for hospitals to profit from bundled payments, the potential lies in post-acute care, advises Kelsey Mellard, vice president of Partnership Marketing and Policy with naviHealth.

Preoccupied with such urgencies as avoiding CMS readmissions penalties and adhering to meaningful use requirements, most hospitals haven’t taken the time to examine potential cost savings from engaging post-acute providers in bundled payment initiatives, Mrs. Mellard explained during a May 2014 webinar on opportunities from bundled payments.

But recruiting high-performing skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals into its post-acute care (PAC) network has helped to drive down SNF, IRF and LTAC per member per month (PMPM) costs for naviHealth, which bills itself as a risk partner for health systems and health plans managing PAC utilization and spend.

naviHealth is also an awardee convener for model 2 and model 3 of the CMS Bundled Payments for Care Improvement (BPCI) pilot. Model 2 concerns itself with retrospective acute care hospital coupled with post-acute care episodes, while model 3 is restricted to care episodes involving retrospective post-acute care only.

While there are more than 300 healthcare organizations participating in the BPCI pilot, naviHealth is most engaged in model 2, whose bundled reimbursement rewards efficiency, communication, accountability, Ms. Mellard noted.

The naviHealth model of coordinated, data-driven care has helped to reduce its average post-acute care costs in the Medicare population to $53 per member per month (PMPM)— almost half the national average.

“We impact and work with the discharge planners to identify the most appropriate setting for our beneficiaries and the duration of the setting, and then manage that readmission risk and prevention program that follows.”

To identify potential participants for its PAC network, naviHealth has created dashboards that evaluate efficiency, quality and other metrics such as volume obtained from CMS. They also consult with care managers for recommendations, then invite the post-acute care providers to a ‘town hall meeting’ with our hospital partners to provide an overview of the bundled payment program.

“It’s been fun to see the level of excitement of how the business model is fundamentally changing. Everyone wants to be at the table, because they know that we are entering a risk-bearing phase of our business and within healthcare in general.”

While CMS has closed the opportunity to sign up for bundled payments for the moment, the time is still ripe to engage with providers already participating, she said.

Overall, given the level of activity, conversation, and pending legislation associated with episodic-based reimbursement, the future for bundled payments looks bright, concluded Ms. Mellard.

Listen to an extended interview with Kelsey Mellard.