JANUARY 3, 2019

Welcome to the Bundled Payment Update eNewsletter
Editor: Philip L. Ronning
This issue sponsored by the
National Pay for Performance (PfP) Summit, the National Population Health Colloquium,
and the Combined National ACO, Bundled Payment, and MACRA Summit.

Pitfalls and Potential in Medicare's Move Toward Outpatient Care Episodes
To improve the value of U.S. health care, Medicare has implemented episode-based bundled payments for a range of surgical procedures and medical conditions. With this approach, the agency pays provider organizations a fixed amount per care episode -- a period defined by a prespecified trigger (for example, hospitalization) and duration (for example, 90 days after discharge) -- and holds them financially accountable for episode quality and costs. To date, Medicare has exclusively designed inpatient episodes triggered by hospitalization and spanning up to 90 days after discharge. These efforts have produced mixed results, generating savings for joint replacement surgery but not medical conditions that may be poorly suited to hospital-centered episode design (13). More important, an inpatient focus limits the relevance of bundled payments to patients ill enough to be admitted and fails to engage physicians and patients in the shared goals of preventing hospitalizations. (Annals of Internal Medicine, December 4, 2018)

Cleveland Clinic Florida, Wellstar Health System Among First to Join Humana's Value-Based Care Program
Cleveland Clinic Florida and Georgia-based Wellstar Health System are among the first health systems to join Humana's Hospital Incentive Program (HIP) intended to reduce duplicative services and hospital readmissions. Under the incentive program, available to hospitals with an active commercial contract with Humana, the Louisville, Kentucky-based insurer will make payments to general acute care hospitals based on how they improve patient experience, safety and outcomes compared to other hospitals in their region or nationally. Measures in the program for care coordination and palliative care were developed in partnership with The Joint Commission. (FierceHealthcare, December 19, 2018)

Accolade Introduces Centers of Excellence Solution through New Partnership with Health Design Plus
Accolade, a personalized advocacy solution for employers, health plans and their members, and Health Design Plus (HDP), provider of value-based Centers of Excellence programs nationally, announced a formal alliance designed to help employers optimize the value of their Centers of Excellence (CoE) programs and improve health outcomes and related healthcare costs. Accolade and HDP actively engage individuals and families in their health and support them in getting to the right care at the right time. The integrated Accolade and HDP model seeks to eliminate unnecessary surgery, reduce complications and related care costs, and significantly improve the experience and overall cost of care for the employer and the member. Accolade provides personalized advocacy services that fully complement the CoE program. Accolade combines compassionate advisors, clinical experts and intelligent technologies that work together for the early identification of employees who can benefit from a Center of Excellence, while driving awareness and program utilization. (PRNewswire, December 3, 2018)

HHS Making Bundled Payments Mandatory Again
In 1983, the diagnosis related group (DRG) prospective payment system was established, which laid the groundwork for the development of numerous bundled payment models. The DRG system allows Medicare to pay a fixed amount of money for a patient's hospital stay based on the diagnosis of each beneficiary upon admission. The numbers of DRGs have more than doubled since the system's inception. As a corollary to DRGs, in 1991, the Centers for Medicare and Medicaid Services (CMS) began pilot programs for bundled reimbursement of certain medical procedures, including one for patients undergoing coronary artery bypass graft surgery. This program included a fixed payment for a patient's initial hospitalization and any re-admissions that occurred within a 90-day time period. The program was found to reduce adverse events and rates of death and generate healthcare cost savings. More recently, in 2016, the Oncology Care Model (OCM) was created. OCM established bundled payments for six-month episodes of cancer treatment that begin at the start of chemotherapy. Provisions for mandatory bundled payments had been included in the Affordable Care Act (ACA) for a number of conditions, including acute myocardial infarction and coronary artery bypass grafting. These were cancelled or scaled back in 2017. But, after temporarily being put on hold, bundled payment models are going to be made mandatory again, according to the Department of Health and Human Services (HHS) Secretary Alex Azar. Addressing re-introduction of mandatory bundled payments, Secretary Azar suggested that "real experimentation with episodic bundles requires a willingness to try mandatory models. We know they [mandatory models] are the most effective way to know whether bundles can successfully save money and improve quality." So, once more, the Trump Administration demonstrates a pragmatic approach, deciding in the end to keep a piece of the ACA, despite rhetoric to the contrary regarding what some in the Administration see as the abomination of ACA. (Forbes, December 5, 2018)

Developing Alternative Payment Models That Providers and Commercial Payers Support
Patients with cancer in the United States have significantly benefited from steady improvement in treatment outcomes over the past few decades. Data from the National Cancer Institute show a large decline in the cancer death rate, down by 25% since 1990.1 Although some of the improvement is a result of prevention and screening, advances in technology and in chemotherapy and immunotherapy pharmaceuticals have been major driving forces. These advances have come at a significant cost, however. A 2011 study projected that the cost of all cancer care in the United States would rise to $157.7 billion by 2020, up from $124.5 billion in 2010.2 In an attempt to control the cost of care, many commercial payers have implemented prior authorization (PA) requirements. For oncologists, the result has been a huge administrative burden, with increasing denial rates and a drop in overall payment for services.3 A survey of American Society of Clinical Oncology state affiliate organizations found that the PA process increased demands on staff time, delayed patient care, decreased patient satisfaction, and complicated medical decision making.4 In addition, the actual cost-reduction benefit of applying strict PA requirements to the fee-for-service system has been questioned. (OncLive, December 24, 2018)

Q&A: Keck Medicine's Jackiewicz Talks Expansion, Embracing Bundled Payments
Aiming to get ahead of the curve rather than be left behind, Thomas Jackiewicz is pushing Keck Medicine of USC to fully embrace bundled payments and the move to value. He's also positioning the system to expand, both in Southern California and beyond. Jackiewicz has served as senior vice president and CEO of Keck since 2012. He oversees operations at three USC hospitals, including the flagship Keck Hospital of USC, as well as more than 40 affiliated clinics and a large medical group. Jackiewicz recently met with the Modern Healthcare editorial board. The following is an edited transcript. (Modern Healthcare, December 15, 2018)

CMS Bundled Payments Toolkit

(Becker's Hospital CFO Report, November 12, 2018)

Bundled Payment Update e-Newsletter is one of a family of free e-Newsletters providing a complimentary video presentation and regularly updated news and key resources on major health care issues such as ACOs, patient safety, pay for performance, comparative effectiveness, readmissions, and Medicaid. To view and subscribe to other e-Newsletters go to www.HealthCareeNewsletters.com.

Advancing Value-based Care with Payment Reform

Mark McClellan
Director, Robert J. Margolis Center for Health Policy and Margolis Professor of Business, Medicine and Health Policy, Duke University