Implementing a bundled payment program requires new knowledge, sophistication, and skills. In my healthcare career of 40 years focused on managed care and the hospitalist specialty, my work with Remedy and bundled payments again has me on a steep learning curve. Here I list my Top Ten "AHA" learnings at Remedy, in no particular order.
NUMBER 10: MEDICARE EVOLUTION
Bundled Payment is the third transformative reimbursement initiative that Medicare has implemented for hospitals over the past 40 years. The first was Diagnostic Related Groups (DRGs) aimed at reducing hospital costs. The second was Hospital Value Based Purchasing (VBP) focused on quality improvement. The bundled payment program is designed to incentivize higher quality, more affordable healthcare over the course of an episode of care, including the recovery period.
NUMBER 9: UNINTENDED CONSEQUENCES
The general consensus of evaluations of the Medicare DRG program is that hospital efficiency has improved, resulting in decreased length of stay. However, as hospitals have discharged patients sooner, there has been a substantial increase in post acute care utilization and costs, especially in Skilled Nursing Facilities. “For every action, there is an equal and opposite reaction.”
NUMBER 8: LOCATION, LOCATION, LOCATION
Analysis of a large Medicare claims data set provided to Remedy indicates there is a substantial variation in the cost of an episode of care, depending on the next site of care following discharge from the hospital. For example, for the Congestive Heart Failure (CHF) bundle, patients discharged home average $13,500 for a 90 day episode including initial inpatient stay; patients discharged home with home health care average $18,300; patients discharged to SNFs average $32,300; and patients discharged to long-term acute care hospitals average $56,300.
NUMBER 7: SURGICAL BUNDLES VS. MEDICAL BUNDLES
The “pathways” for surgical bundles (especially those that are planned) provide more predictable opportunities for care coordination. Issues can be identified and care planning initiated early in the bundle cycle, even during the pre-operative care period. Medical bundles, often with multiple co-morbidities, offer substantial opportunity for improved care coordination, but require nimble, responsive, multidisciplinary team based care to address a wide range of patient and environmental factors.
NUMBER 6: WE ARE THE CHAMPIONS
To successfully implement bundled payment programs, leadership is required from two types of clinician champions, physicians and case managers. Physicians have overall responsibility for the patient’s care and under bundled payment, this includes post acute care. Case managers are the critical players on the front-line dealing with patients and their family caregivers as they address patient needs after hospital discharge, selection of next site of care, coordination during care transitions, and timely follow up during the recovery period.
NUMBER 5: CARE REDESIGN
The singular term that is used to capture the transformation that must occur under bundled payment is care redesign, defined as interventions that improve quality while reducing or controlling costs. However, care redesign is not a simple concept. It has many elements including caregiver support, community services, care coordination, quality improvement, clinical guidelines, process re-engineering, data analytics, information technology, and financial incentives.
NUMBER 4: THE THREE KEYS
The three key opportunities for bundled payment interventions are: 1) appropriately redirecting discharged patients home rather than to post acute care facilities; 2) optimizing length of stay in post acute care facilities so that patients return home as soon as they are able; and 3) preventing avoidable readmissions. Internal cost savings, which refers to removing inpatient costs through reduced testing and employing high value devices and implantables, is also a key savings lever.
NUMBER 3: THE GATEWAY
Providers implementing bundled payment must initiate care redesign as early in the process as possible. That includes involving clinical and administrative staff in the emergency department. Some patients do not need to be hospitalized and can be redirected to other sites of service prior to admission.
NUMBER 2: PALLIATIVE CARE
Sometimes the healthcare system treats a patient’s organs, systems, and diseases rather than the whole patient. This can be especially true when a patient has a life-limiting illness, where comfort and symptom control are required in addition to or rather than curative treatment. Palliative care, whether hospital-based or home-based, is an important element of implementing care redesign in a bundled payment program.
NUMBER 1: THE REMEDY 12-POINT STRATEGY
REMEDY has identified a 12-point strategy for implementing care redesign that includes pre-operative assessment, patient identification, on-boarding, advance directives/palliative care, early ambulation, judicious use of consultants, next-site-of-care determination, patient/family meeting, arranging of follow-up services, a safe transition, monitoring of recovery goals, and addressing readmission risks.
Bundled payment programs can be complex to implement, requiring new skills and competencies. Each of the items listed in this top ten list can serve as a “chapter” in a curriculum for providers addressing the transformation necessary for success with bundled payments.
Joseph A Miller, MS
Care Redesign Team at Remedy Partners
Mr. Miller is currently a consultant to the Office of the CMO at REMEDY PARTNERS, working as part of the Care Redesign Team. Mr. Miller’s professional career consists of over 40 years of management, consulting, and research in the healthcare industry. He has worked for organizations that have been involved with major movements transforming the industry – managed care (Harvard Community Health Plan, Oxford Health Plan), hospitalists (Society of Hospital Medicine), and most recently bundled payments (REMEDY PARTNERS). The focus of his work has been on strategic innovation, often involving the use of technology. He has extensive experience in tracking and incorporating best business practices, program design and implementation, and organizational change management. Mr. Miller has a BS from Cornell University and a MS from the Massachusetts Institute of Technology.