Additional Information on the new Medicare Plan is Provided Below this article.   

 

Some state health care providers leery of new Medicare pay plan

September 1, 2011

By Deirdre Shesgreen, CTMirror.org

http://www.ctmirror.org/story/13758/bundledpayments

 

WASHINGTON--Medicare officials in Washington are trying to woo doctors and hospitals to participate in a strategic new pilot program they hope will save money, improve care, and become a model for the future.

The week-old project has already sparked intense debate among Connecticut health care providers, although few are rushing their applications to Washington just yet. For now at least, there's perhaps as much hesitation as there is enthusiasm.

At issue is a wide-ranging demonstration project that aims to dramatically revamp how providers are paid for health care services. It's part of a broader effort, envisioned by the federal health reform law, to create a more efficient health care system that rewards good health care outcomes, rather than lots of appointments, tests and other services.

"Today, Medicare pays for care the wrong way," Secretary of Health and Human Services Kathleen Sebelius said in a conference call with reporters last week. "Payments are based on the quantity of care... not the quality of that care." She noted that the current system can even "punish the providers that are most successful in getting and keeping their patients healthy."

That's because Medicare and private insurers currently reimburse providers under a "fee-for-service" system; the more tests, procedures, or appointments a doctor schedules, the more reimbursements he or she gets.

That rewards volume. And critics say it also fosters fragmented care, where the primary care doctor doesn't talk to the specialist, and the pharmacist doesn't talk to the home care nurse. Each provider works in their own silo, without coordinating the patient's overall needs, leading to duplicative care or misdiagnoses.

As part of an effort to streamline the payment system, HHS unveiled its new pilot project last week, which would pay hospitals and doctors for an entire "episode" of care. Instead of paying different providers for each separate procedure or test, Medicare would pay one lump sum for treating a patient's illness from start to finish.

In Washington jargon, it's been dubbed the "Bundled Payments Initiative." And it sounds good--in theory at least.

"Physicians and hospitals have not always had the most equal relationship. This gives them the opportunity to come together as true partners, for the benefit of the patient," said Nancy H. Nielsen, a doctor and past president of the American Medical Association who is now serving as an HHS advisor on health reform for Medicare and Medicaid Innovation.

But some Connecticut providers see it a little differently.

"What Medicare is trying to come up with is a way to incentivize providers to provide less care," said Vincent G. Capece Jr., president and CEO of Middlesex Hospital.

"There's a sense that there's over-utilization in the system, so they're trying to wring out some of that," he said. "Whether the models being proposed will provide the right incentives is yet to be seen."

But the gamble for providers is clear. "They want us to propose a payment that's at least 2 or 3 percent less than what we get paid right now," Capece said.

The upshot, ideally, is that the program "gives us the flexibility to work with physicians to make up that discount by lowering our costs internally," he said. But there's no guarantee of finding those savings.

For doctors in particular, the pilot program looks risky at best, and unworkable at worst. "The proposed bundling approaches that were outlined really aren't structured in a way that benefits or allows the majority of Connecticut physicians the opportunity to participate," said Matthew C. Katz, executive vice president of the Connecticut State Medical Society.

Because the vast majority of physicians in the state practice in solo or small offices, "the assumption of risk, whether it's at the front end or back end, is not something they can do," said Katz. "And when you don't have the data from an integrated health system, it's virtually impossible to understand what the total cost for an episode of care will be."

So Connecticut doctors have been somewhat frustrated and puzzled by the new initiative, he said, because they aren't even in a position to figure out how much they should or could get paid if they coordinate with a hospital, pharmacist, and other providers for an entire swath of care.

The HHS initiative outlines four models that providers--whether a hospital, group of doctors, or another organization-can follow to participate in the demonstration project.

Under the Bundled Payment Initiative, Medicare would link payments for multiple services that patients get during an "episode of care," such as a hip replacement or heart bypass surgery.  For example, instead of a surgical procedure that results in multiple claims from a bevy of different providers, an entire team of providers would be work to provide care that for one lump payment.

If they do that efficiently--i.e., at a lower cost than under the fee-for-service--the team gets to share in the savings with the Medicare program. But if they don't, in at least one of the four models, they could end up getting stuck for the extra costs.

"It's clearly the wave of the future," said Nielsen. "We've really got to, as a nation, drive the cost of health care down. And we have to do it in such a way that the quality of care delivered to Medicare beneficiaries is the same or better."

She said that CMS structured the program with maximum flexibility to make it appealing to different kinds and sizes of providers. Even if doctors don't apply themselves, she said, they will be key players if the hospitals where they're admitted to practice opt to participate.

"The way we envision doctors participating is being on equal footing with the hospitals where they practice and working together to try to improve care," she said.  "We know that there are efficiencies to be had in every hospital in the country, so if people bring their best efforts to the table in partnership--the hospital, the nurses, the pharmacist and the doctor--we do believe that not only will patients benefit but" providers will too.

But the doctors and administrators at Middlesex Hospital say it's a big risk. And they should know.

For the last five years, they've participated in a similar project, in which they have tried to treat all their Medicare patients in a more efficient, more coordinated way, while reducing costs. While they've hit all of Medicare's quality targets, they haven't been able to reach the savings goals--and thus to reap any of the shared rewards.

"One of the things we learned in that program is that again how difficult it is to control costs," said Dr. Arthur V. McDowell, III, vice president of clinical affairs at Middlesex.

Still, Capese said he and other Middlesex officials are weighing whether to apply for the new pilot program. "The advantage would be that you get to learn quickly and perhaps get a leg up on the industry," he said.

While it might be easier to sit back and learn from the mistakes of other providers, "I think you learn quicker and better when you're learning from your own mistakes," he said. And if this is the payment model of the future, "we're going to have to learn to do it, sooner or later."

He said that whether a new bundled payment system replaces the current fee-for-service model remains an open question. But what's clear is that payments to providers are going to be slashed, one way or another.

"We're definitely moving towards programs that are going to pay providers less," he said. "What CMS is trying to figure out is, what's the best way to do that, what's the fairest way."

Katz, for his part, said he fears the CMS pilot program is more focused on saving money than anything else. "These models don't seem to address quality as much as cost," he said. "It's hard to see where the quality achievements really are."

And he said so far, he doesn't know of any doctors groups, even the larger networks, who are gearing up to apply.

Even if they opted for one of the models that offers incentives, he said, "there is still a risk because doctors will how to figure out how to change their billing, how to change their practice managing systems," and make other adjustments to the fee structure. "We've been advising physicians to proceed with caution

 

 

 

 

 

 

 

 

 

 

 

 

 

News Release

Affordable Care Act initiative to lower costs, help doctors and hospitals coordinate care

The U.S. Department of Health and Human Services (HHS) today announced a new initiative to help improve care for patients while they are in the hospital and after they are discharged. Doctors, hospitals, and other health care providers can now apply to participate in a new program known as the Bundled Payments for Care Improvement initiative (Bundled Payments initiative). Made possible by the Affordable Care Act, it will align payments for services delivered across an episode of care, such as heart bypass or hip replacement, rather than paying for services separately.  Bundled payments will give doctors and hospitals new incentives to coordinate care, improve the quality of care and save money for Medicare.

“Patients don’t get care from just one person – it takes a team, and this initiative will help ensure the team is working together,” said HHS Secretary Kathleen Sebelius.  “The Bundled Payments initiative will encourage doctors, nurses and specialists to coordinate care. It is a key part of our efforts to give patients better health, better care, and lower costs.”

In Medicare currently, hospitals, physicians and other clinicians who provide care for beneficiaries bill and are paid separately for their services.  This Centers for Medicare & Medicaid Services (CMS) initiative will bundle care for a package of services patients receive to treat a specific medical condition during a single hospital stay and/or recovery from that stay – this is known as an episode of care.  By bundling payment across providers for multiple services, providers will have a greater incentive to coordinate and ensure continuity of care across settings, resulting in better care for patients.  Better coordinated care can reduce unnecessary duplication of services, reduce preventable medical errors, help patients heal without harm, and lower costs.

The Bundled Payments initiative is being launched by the new Center for Medicare and Medicaid Innovation (Innovation Center), which was created by the Affordable Care Act to carry out the critical task of finding new and better ways to provide and pay for health care to a growing population of Medicare and Medicaid beneficiaries.

Released today, the Innovation Center’s Request for Applications (RFA) outlines four broad approaches to bundled payments.  Providers will have flexibility to determine which episodes of care and which services will be bundled together.  By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.

“This Bundled Payment initiative responds to the overwhelming calls from the hospital and physician communities for a flexible approach to patient care improvement,” said CMS Administrator Donald Berwick, M.D.  “All around the country, many of the leading health care institutions have already implemented these kinds of projects and seen positive results.”

The Bundled Payments initiative is based on research and previous demonstration projects that suggest this approach has tremendous potential. For example, a Medicare heart bypass surgery bundled payment demonstration saved the program $42.3 million, or roughly 10 percent of expected costs, and saved patients $7.9 million in coinsurance while improving care and lowering hospital mortality. 

“From a patient perspective, bundled payments make sense.  You want your doctors to collaborate more closely with your physical therapist, your pharmacist and your family caregivers.  But that sort of common sense practice is hard to achieve without a payment system that supports coordination over fragmentation and fosters the kinds of relationships we expect our health care providers to have,” said Dr. Berwick.

Organizations interested in applying to the Bundled Payments for Care Improvement initiative must submit a Letter of Intent (LOI) no later than September 22, 2011 for Model 1 and November 4, 2011 for Models 2, 3, and 4. For more information about the various models and the initiative itself, please see the Bundled Payments for Care Improvement initiative web site at:
http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.

To view a factsheet on the Bundled Payments for Care Improvement initiative visit http://www.healthcare.gov/news/factsheets/bundling08232011a.html

Interested parties may obtain answers to specific questions by e-mailing CMS at: BundledPayments@cms.hhs.gov.

This initiative is part of a broader effort by the Obama Administration to improve health, improve care, and lower costs. A brief summary of other efforts, including those authorized by the Affordable Care Act, can be found at: www.HealthCare.gov/news/factsheets/deliverysystem07272011a.html

For more information about the CMS Innovation Center, please visit: http://www.innovations.cms.gov.

 

 

 

Improving Care Coordination and Lowering Costs by Bundling Payments

 

 

The Affordable Care Act provides a number of new tools and resources to help improve health care and lower costs for all Americans.  Bundling payment for services that patients receive across a single episode of care, such as heart bypass surgery or a hip replacement, is one way to encourage doctors, hospitals and other health care providers to work together to better coordinate care for patients both when they are in the hospital and after they are discharged. Such initiatives can help improve health, improve the quality of care, and lower costs.

The Centers for Medicare & Medicaid Services (CMS) is working in partnership with providers to develop models of bundling payments through the Bundled Payments initiative.  On August 23, 2011, CMS invited providers to apply to help test and develop four different models of bundling payments. Through the Bundled Payments initiative, providers have great flexibility in selecting conditions to bundle, developing the health care delivery structure, and determining how payments will be allocated among participating providers.

Reducing Fragmented Care

Medicare currently makes separate payments to providers for the services they furnish to beneficiaries for a single illness or course of treatment, leading to fragmented care with minimal coordination across providers and health care settings.  Payment is based on how much a provider does, not how well the provider does in treating the patient.  Under the Bundled Payment initiative, CMS would link payments for multiple services patients receive during an episode of care.  For example, instead of a surgical procedure generating multiple claims from multiple providers, the entire team is compensated with a “bundled” payment that provides incentives to deliver health care services more efficiently while maintaining or improving quality of care.  Providers will have flexibility to determine which episodes of care and which services would be bundled together.

Research has shown that bundled payments can align incentives for providers – hospitals, post acute care providers, doctors, and other practitioners– to partner closely across all specialties and settings that a patient may encounter to improve the patient’s experience of care during a hospital stay in an acute care hospital, and during post-discharge recovery.

Models of Care to Bundle Payments

The Bundled Payments initiative is seeking applications for four broadly defined models of care.  Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively.  By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.

Retrospective Payment Bundling

In these models, CMS and providers would set a target payment amount for a defined episode of care.  Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data.  Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount.  After the conclusion of the episode, the total payments would be compared with the target price.  Participating providers may then be able to share in those savings.

Providers have the flexibility to choose whether to define an episode of care as:

·            Hospital services provided to a beneficiary during an acute inpatient stay, where physicians are partners in improving care (Model 1);

·            Hospital, physician, post-acute provider, and other Medicare-covered services provided during the inpatient stay as well as during recovery after discharge to the home or another care setting (Model 2); or

·            Hospital, physician, post-acute provider, and other Medicare-covered services beginning with the initiation of post-acute care services after discharge from an acute inpatient stay (Model 3).

In models 2 and 3, components of the bundle may include clinical laboratory services and durable medical equipment.

Prospective Payment Bundling

Under Model 4, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners.  Physicians and other practitioners would submit “no-pay” claims to Medicare and would be paid by the hospital out of the bundled payment.

A side-by-side comparison of key features of the four models is available here.

For Model 1, letters of intent for the initiative are due on September 22, 2011 and for Models 2, 3 and 4, they are due on November 4.  The extra time for Models 2, 3, and 4 is to allow potential applicants to complete request forms for historical Medicare claims data that will aid in developing episode definitions. The program is expected to start on a rolling basis in 2012.

Proven Results with Bundled Payments

Both Medicare and private health care providers have shown that bundling payments improves care for patients, and leads to better health, better care and lower costs. 

·            During the five-year Heart Bypass Center Demonstration (started in 1986) Medicare saved $42.5 million – or 10 percent – on Coronary Artery Bypass Graft surgery at participating hospitals  in Atlanta, Columbus, Ann Arbor (Michigan), and Boston, largely through improved hospital processes and a reduced need for intensive care.  Medicare patients saved $7.9 million in coinsurance payments.

·            Medicare’s three-year cataract surgery demonstration (started in 1993) was also successful in reducing Medicare spending by $500,000 for approximately 7,000 procedures at sites in Cleveland, Dallas/Fort Worth, and Phoenix.

·            The fixed price for Coronary Artery Bypass Grafts (CABG) under Geisinger’s ProvenCare reduced costs and improved patient care showing that hospital costs dropped 5 percent, average length of stay fell by 0.5 days, and the 30-day readmission rate fell 44 percent over 18 months for Pennsylvania hospitals in Geisinger’s network.

Better Health, Better Care, Lower Costs

Bundled payments are just one part of a wide-ranging effort by the Obama Administration to improve the quality of health care and lower costs for all Americans, using important new tools provided by the Affordable Care Act.  Accountable Care Organizations (ACOs) are another way that doctors, hospitals and other health care providers can work together to better coordinate care for patients, which can help improve health, improve the quality of care, and lower costs.

The National Quality Strategy provides strategic direction for ensuring progress toward delivery system reforms that reward quality rather than the volume of services provided.  The recently launched Partnership for Patients is bringing together hospitals, doctors, nurses, pharmacists, employers, unions, and State and Federal government to keep patients from getting injured or sicker in the health care system and to improve transitions between care settings.  CMS intends to invest up to $1 billion to help drive these changes through the Partnership initiative, which it projects will save Medicare $50 billion over 10 years. And beginning in FY 2013, for the first time, the Hospital Value-Based Purchasing program authorized by the Affordable Care Act will pay hospitals’ inpatient acute care services based partially on care quality, not just on the quantity of the services they provide.

A brief summary of HHS initiatives to improve care, including information about new initiatives authorized by the Affordable Care Act, can be found at:

http://www.healthcare.gov/news/factsheets/deliverysystem07272011a.html

 

Complete article at ….. http://www.healthcare.gov/news/factsheets/bundling08232011a.html