A comprehensive overview of the components of a bundled payment project highlighting the affects on IT.

1. Bundled Payments:
The Impact on IT
January, 2014

2. If you remember just one thing…..
Your next CFO isn’t coming from
the health industry.
Your next CFO is coming from
industrial USA.

3. The Commoditization of Healthcare
• Great news
– everything’s getting better
– and cheaper
– and more accessible
• Bad news
– providers are a dime-a-dozen

4. Your New Bag of Tricks
→Differentiators in offerings
→New reimbursement models
→Bundled payments

5. What Are Bundled Payments?
• Episode - all services
provided to a patient
related to a specific
medical problem in a
limited timeframe
• Bundle – all
services provided
during an episode for
which “you” are
financially
responsible

6. What Are Bundled Payments
Episodes
CABG Gall Bladder
Colonoscopy Joint Arthroscopy
C-Section Joint Replacement
Endoscopy Pregnancy/Deliver

7. What Are Bundled Payments
Chronic Conditions
Asthma Depression
CAD Diabetes
CHF GERD
COPD Hypertension

8. The Theory
Cost savings by shifting risk Being closer to the care, the
provider can drive efficiencies
Nothing new here

9. The Reality
→This time it’s different
→Commoditization makes this possible
→That’s what’s new….for healthcare

10. Why Participate?
Profitable – if you
can figure it out
First one to success
sets the stage
Capture
market
share
Increase
market
size

11. If I Don’t Participate?
•Lose patients
•How many patients do you have to lose to
be out of business?
•30%, 20%, 10% ?

12. Planning/executing your project
•Getting started
•Determining bundles
•Contracting
•Workflow
•Cost management
•Monitoring performance

13. Getting Started
• Secure project champion
• Develop multidisciplinary team
– Gain physician “buy-in” early and often
• Identify key success factors
• Identify key performance analytics (KPIs)
• Establish baselines – gather historical data
• Build cost accounting models for case tracking

14. Determining Bundles
•You’re building a model(s)
•Acute vs. chronic situations
•Limiting exposure while maintaining quality
•Clinical/finance involvement in design
•Redeveloping care models

15. Determining Bundles
•Where to start?
– What you’re good at
– What you can control
– Areas of excellence / best practices
– MS-DRG if you’re a hospital
– High volume

16. Determining Bundles
•Questions to answer
– What products/services are in/out?
– What have we done in the past?
– What is redundant/unnecessary ?
– Where can we leverage control?
– What causes “outliers”?

17. Determining Bundles
•Many answers (currently) in claims data
– The only structured data source we have
– Your internal systems (billing)
– Business partner (payer)
– CMS data
•Start and end point (warranty)
•Commercial products can help

18. Determining Bundles
Source: http://info.medinsight.milliman.com/?Tag=Bundled+Payment

19. Determining Bundles
Source: http://info.medinsight.milliman.com/?Tag=Bundled+Payment

20. Determining Bundles
•Redeveloping care models
–Review current models
–Specialty clinical protocols
–Best practices…for you
–Financial ramifications

21. Determining Bundles
•IT impacts
– Identifying data sources
– Data aggregation from disparate sources
– Defining/acquiring/developing analytical tools
– Ongoing analysis to refine bundle definition
process

22. Contracting
• Gainsharing and withhold models
• Employer-provider contracting bypassing
insurance companies
• Physician directed models – the hospital as a
resource
• Including non-medical services in bundles
• Billing for bundles in a fee-for-service world
• Patient/provider contracts

23. Contracting
•Examples of excluded conditions
– BMI > 33, A1C > 6.5, anemia
– Significant depression/drug use/abuse
•Examples of excluded services
– Inpatient/outpatient rehab
•Examples of warrantied services
– Readmission related to surgical site issues

24. Contracting
•IT impacts
– Tracking/analyzing historical data
– Directing/receiving bills to/from multiple parties
– Billing for bundles in a fee-for-service world

25. Workflow
•Clinical and IT
– Operating both FFS and BP treatment models
– Operating both FFS and BP billing models
– Standards (and lack of) in bundled payments
– The effects of bundles on analytics

26. Workflow
•Treating bundled patients
– Different than traditional patients?
– Case management
– Ongoing tracking of costs (services)

27. Workflow
•Billing bundled patients
– Effects on charge capture
– Automation of different billing models
• “Dummy” 837
• “Conventional” invoicing
– Effects on payment processing

28. Workflow
•The effects of bundles on analytics
– Example: pro-rating payments
•Metric: average reimbursement for a
service
– FFS: 835 ties payment to service
– BP: What portion of payment is assigned
to a service?

29. Workflow

30. Workflow

31. Workflow

32. Workflow
•IT impacts
– EMR identifying and tracking BP patients
– Ongoing feedback on BP case progress
• Wholesale changes to charge capture?
– Billing/invoice processing
– Payment processing

33. Cost Management
•The key to profitability
– Cost accounting methods and systems
– Issues in tracking costs by case
– Standardizing care to leverage purchasing
and reducing costs
– Expanding the bundle process to FFS
– Broadening the scope of services

34. Cost Management
•Question:
– How do we know if we’re making money?
•Answer:
– If revenue exceeds cost.

35. Cost Management
•What are costs?
– The usual suspects (payroll, supplies, …..)
– Direct costs (implants)
– Indirect costs (administration, regulatory)
•FFS ties direct costs (implants) thru billing
– Sometimes
•Reality: Healthcare lags industry in cost
management

36. Cost Management
•Cost management/reduction issues
– Understanding current costs
– Cost reduction: standardizing care
– Cost elimination: process change
– Expanding the bundle process to FFS
• Reduces revenue, also!
– Broadening the scope of services
• ↑ costs & ↑ revenue

37. Cost Management
•IT impacts
– Cost management system implementation
– Ancillary support systems (e.g., surgical trays)
– System integration

38. Monitoring Performance
•Continuous improvement
– Case tracking/intervention avoids adverse
exposure
– Quality measures/KPIs
– Ongoing analysis/corrective action for outliers
– Using results to renegotiate payer contracts

39. Monitoring Performance
• Questions:
– Are we making money?
– Where are the “exceptions”/how to avoid?
– How can we squeeze/eliminate costs?
– What are the opportunities for more revenue?
– Are my “customers” happy?
– Can we renew our contracts with better terms?

40. Monitoring Performance
•Examples of KPIs:
– Clinical: Readmission rates/SCIP scores
– Financial: Average cost/case, margin/case
– Customer: Satisfaction index/outcomes

41. Monitoring Performance
•IT impacts
– Exception reports/alerts in “real time”
– Regular/on-demand performance analysis
reports
– Quality measures: capture, analyze, report

42. Questions?
Thank You!
Sheldon Hamburger
shamburger@thearistonegroup.com
(248) 613-7166