Is Your Healthcare Facility Ready for Bundled Payments?

While attending the Healthcare Financial Management Association Region 9 Conference in New Orleans, we learned that bundled payments are near and healthcare facilities should start preparing now.   

Bundled payments consolidate reimbursement into a single payment for the care and services related to a specific procedure or episode along the continuum of care. These payments are designed to incentivize the coordination of care among various health care providers, such as physicians, hospitals and post-acute care facilities, as well as to emphasize accountability for the cost and quality of care provided to patients. The Centers for Medicare and Medicaid Services estimates that by 2016, 30 percent of Medicare payments will be value-based and will expand to nearly 50 percent by 2018.   

CMS has launched value-based payment initiatives with the implementation of two models -- Bundled Payments for Care Improvement and the Comprehensive Care for Joint Replacement. The CCJR is the first mandated bundled-payment model and will affect 75 metropolitan statistical areas and cover approximately 800 facilities. This mandatory five-year program is slated to start Jan. 1, 2016, and estimates show that it could generate up to $153 million in savings.

CCJR will include MS-DRGs 469 and 470, excluding ESRD, as well as the inpatient stay, all professional services, and 90-day post-acute care, including any related readmissions. Savings are expected to arise from standardization of care, reduced readmissions, reduced average length of stay, and reduced admissions to Skilled Nursing Facilities. Ultimately, the model should generate improved quality of care. 

Planning and working proactively will be crucial going forward. Data is a strategic asset for an organization working to manage bundled payments effectively. Choosing collaborative partnerships and narrowing provider networks will also be very important to facilities.

Based on this knowledge, here are four key take-aways:

1. Being first matters more than being perfect – failure tolerance.
2. Not all bundles are created equally – evaluate carefully.
3. You must know your value proposition – care protocols, outcomes data, the focus, etc.
4. Predictive risk tools are necessary and will become the norm.

Leaders need to look at the data carefully and make sure they can handle the risk. They should make sure everyone is on board and included in the conversations to make sure none of the pieces or areas are missing.

The final rule regarding the mandatory CCJR has not been released yet, but we expect it before the start date of Jan. 1, 2016. Follow our blog for weekly updates and insights into healthcare industry news.