Value-based care: Taking healthcare's biggest paradigm shift one step at a time
Episodic bundled payments
"In my opinion, episodic bundled payments are the best place to start," says Mr. Splan. Both the Centers for Medicare and Medicaid Services and private payers have begun to roll out pilot programs for bundled payments and the model is gaining steam.
Where is the value?
Bundled payments are an effective cost-cutting tool – both payers and patients save – that rewards efficient providers who have excellent clinical outcomes. Payers and providers negotiate a single fee that will cover an entire episode of care. Thus far, bundled payments have typically come in two different models.
• Advance. The payer will send providers a set fee for a certain procedure prior to the date of service. Any costs beyond the set fee, such as complications or repeat procedures, fall to the provider.
• Retrospective. "In this process, providers bill exactly as they do today and undergo a reconciliation process at the end of the quarter," says Mr. Splan. If providers bill more than the agreed upon bundled amount, they owe the payer money. If they billed under the agreed upon amount, the payer will send them a check.
"The retrospective model is a very low-risk, high value way to go after bundled payments," says Mr. Splan. Providers do not have to redo their billing processes; they simply have to be prepared to analyze quarterly data.
Much of the progress made in bundled payments has been seen in orthopedics. Procedures such as total joints can be very costly, but if the process is streamlined they are a perfect fit for bundling. Mr. Splan has observed the most aggressive movement towards bundled payments in ambulatory surgery centers. "These physicians are doing 600 to 700 joint replacements a year," he says. "It is going to be difficult for competitors to dislodge them if they are providing a better service for less money. That is an effective long-term strategy."
Gradual move to chronic care
In the rush to evolve, some providers are attempting more complex models in an effort to demonstrate that coveted end game: value. But, this is a classic example of trying to fly before learning to walk. "Focusing on population health before mastering episodic procedures, talk about trying to eat the entire elephant," says Mr. Splan.
If providers are able to confidently predict clinical outcomes and receive adequate reimbursement for care, the next step would be chronic conditions. This is admittedly a big step. The number of variables between say a colonoscopy and Crohn's disease rise exponentially. Outcomes are more difficult to predict and value harder to define. Rising hand-in-hand with these difficulties is the level of risk.
While much of healthcare is simply treading water, unsure of how to proceed in this new value-driven field, there are concrete paths to take. For example, Illinois Bone & Joint Institute engaged care plan company Pinpoint Health to actively define and achieve value.
"By gathering and sorting patient and surgery specific information that feeds into the Pinpoint platform, IBJI is able to create an individualized care plan which it can use to monitor and subsequently manage cases in a real time environment rather than retrospectively," says Andre Blom, Director of Rehabilitation Services with the Illinois Bone & Joint Institute.
"A care plan is just like a financial plan. "It gives patients a roadmap for what they can expect during their recovery process, how long it should take and what their options are for choosing their providers of care," says Mr. Splan. "And when people get a plan, there is a core desire to execute that plan." Patients are effectively engaged in their own care, a much sought after goal. The plan is also designed to stick to a strict financial budget. Additionally, outcomes are collected and patients have the ability to give feedback. All of this data can be browsed to observe whether or not providers are performing well and delivering on the promised value.
Population health is the puzzle to solve in healthcare. There are more than 200 accountable care organizations working towards networks of clinical integration that can support population health and many more will rise and fall before all of the pieces fall into place. "There is a frenzy for big data and analytics," says Mr. Splan. "The combination of providers not knowing what they need and vendors saying that population health is everything: you have a huge mess."
The same rules that apply to bundling payments apply here: start small. "Build tools, processes and people, then apply this to bigger projects as you grow," says Mr. Splan. As reimbursement models shift more and more towards value and away from fee-for-service, providers will be driven by necessity to solve this puzzle: one step at a time. "Care is delivered how it is incentivized. You will not change the delivery system until you change the incentive system."
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