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BUNDLED PAYMENT
Medicare model vs Medicaid model
Chad You
Senior Research Data Scientist
Axial Healthcare
April 11, 2017
AGENDA
• What is Bundled Payment
• Why
• How
• CMS Medicare Models
• TennCare Medicaid Model
• CMS model vs TennCare model
• Episode of care, Episode-based payment
BUNDLED PAYMENT
• 1991, bundled payment demonstration project for coronary artery
bypass graft (CABG) surgery
• 2009, Acute Care Episode (ACE) demonstration to test prospective
bundled payment for cardiac and orthopedic surgery – little
evidence of changes in quality
• 2010, ACA – to reduce healthcare spending, to improve the quality
of care
• 2013, Medicare Bundled Payment for Care Improvement (BPCI);
TennCare Medicaid Episodes of Care
• CMS goal – 90% of Medicare payments linked to quality or value by
2018
• 50% tied to alternative payment models (Accountable Care Organizations
(ACOs), bundled payment, and medical homes) by 2018
HISTORY
NATIONAL TREND
• Paying for value and paying for outcomes
• Commercial insurers used value-based payment
• 2013, 11%
• 2014, 40%
Fee-for-
service (FFS)
Global
Capitation
Insurance risk on Payers Insurance risk on Providers
Bundled Payment
INSURANCE RISK
Balance risk
• Providers receive payment after services delivered
• All providers involved in continue to be paid through
current mechanisms
• Principle Provider “quarterback” receives rewards or
penalties based on overall cost of episode
• < target price of the bundle – share the savings
• > target price – lose money
METHODOLOGY
CMS MODELS
• Bundled Payment for Care Improvement (BPCI) Models 1-4
• Model 1: Inpatient hospital services (24 Awardees)
• Model 2: Inpatient hospital, physician, and post-acute services,
including readmissions (61 Awardees, 110 hospitals)
• Model 3: Post-acute services, including readmissions (20 Awardees)
• Model 4: Inpatient hospital and physician services (13 Awardees)
• Retrospective, Model 1, 2, 3
• Prospective, Model 4
• Savings: in Model 2, spending differences between BPCI and
control group episodes in 2 out of 6 clinical categories
• for orthopedic surgery (mostly hip and knee replacements),
payments declined more
• for spinal surgery, spending increased more
• for other clinical categories in all BPCI models, no significant
differences
CMS MODELS
REPORT
• Quality: no differences on quality outcomes in most clinical
episode groups. When differences detected, varied results by
several factors
• clinical episode groups (e.g., orthopedic, cardiovascular, etc.)
• whether or not beneficiaries had a surgical procedure
• whether or not beneficiaries received post-acute care
• Provider Participation: 2 of the 4 models grew steadily, other 2
models experienced multiple withdrawals
CMS MODELS
REPORT
TENNCARE MODEL
• Principles:
• Goal: Coordinated care
• Accountability: QB is designated as accountable
• Incentives: high quality and cost-efficient care is rewarded
• 70+ episodes by 2020
• Wave 1 episodes
• design period, 2013
• preview period, 2014
• performance period, 2015
TENNCARE MODEL
Source: http://www.tn.gov/assets/entities/hcfa/attachments/EpisodesOfCareSequence.pdf
TENNCARE MODEL
Source: http://www.tn.gov/hcfa/topic/episodes-of-care
TENNCARE MODEL
Source: TennCare_Payment_Reform_Initiative.pdf
TENNCARE MODEL
Source: TennCare_Payment_Reform_Initiative.pdf
TENNCARE MODEL
• Context for clinical exclusions and risk adjustment
• Targeted inclusion of spend in the episode
• Exclusion of episodes for business reasons
• Exclusion of episodes of certain patients
• Exclusion or winterizing of episodes with very high episode spend
• Quality metrics
• based on clinical input and practice guidelines
• some quality metrics will be linked to gain sharing
• others for information only
Average cost
per episode for
each provider
Cost per
episode
Example provider’s individual episode costs
Risk-adjusted average episode cost
for the example provider
Example provider’s average
episode cost
Average
Risk-adjusted costs for one type of episode in a
year for a single example provider
Low
cost
High
cost
Annual performance across all providers
Individual providers, from highest to lowest average cost
Gain sharing limit
Commendable
If average cost lower than commendable and quality benchmarks met, share
cost savings below commendable line
If average cost higher than acceptable, share excess
costs above acceptable line
If average cost lower than gain sharing limit, share
cost savings but only above gain sharing limit
If average cost between commendable and
acceptable, no change
This example provider would see
no change.
Acceptable
TENNCARE MODEL
Source: TennCare_Payment_Reform_Initiative.pdf
TENNCARE MODEL
REPORT
• Cost Reduction in first year
• $6.3 million
• 3.4% in Perinatal care
• 8.8% in Asthma exacerbation
• 6.7% in Hip and knee replacement
Source: https://www.tn.gov/tenncare/news/45975
BPCI Model 2
vs
TennCare Model
• Elevation Search Solutions
• Vanderbilt Heart & Vascular Institute
Thanks to our sponsors

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Bundled Payment

  • 1. BUNDLED PAYMENT Medicare model vs Medicaid model Chad You Senior Research Data Scientist Axial Healthcare April 11, 2017
  • 2. AGENDA • What is Bundled Payment • Why • How • CMS Medicare Models • TennCare Medicaid Model • CMS model vs TennCare model
  • 3. • Episode of care, Episode-based payment BUNDLED PAYMENT
  • 4. • 1991, bundled payment demonstration project for coronary artery bypass graft (CABG) surgery • 2009, Acute Care Episode (ACE) demonstration to test prospective bundled payment for cardiac and orthopedic surgery – little evidence of changes in quality • 2010, ACA – to reduce healthcare spending, to improve the quality of care • 2013, Medicare Bundled Payment for Care Improvement (BPCI); TennCare Medicaid Episodes of Care • CMS goal – 90% of Medicare payments linked to quality or value by 2018 • 50% tied to alternative payment models (Accountable Care Organizations (ACOs), bundled payment, and medical homes) by 2018 HISTORY
  • 5. NATIONAL TREND • Paying for value and paying for outcomes • Commercial insurers used value-based payment • 2013, 11% • 2014, 40%
  • 6. Fee-for- service (FFS) Global Capitation Insurance risk on Payers Insurance risk on Providers Bundled Payment INSURANCE RISK Balance risk
  • 7. • Providers receive payment after services delivered • All providers involved in continue to be paid through current mechanisms • Principle Provider “quarterback” receives rewards or penalties based on overall cost of episode • < target price of the bundle – share the savings • > target price – lose money METHODOLOGY
  • 8. CMS MODELS • Bundled Payment for Care Improvement (BPCI) Models 1-4 • Model 1: Inpatient hospital services (24 Awardees) • Model 2: Inpatient hospital, physician, and post-acute services, including readmissions (61 Awardees, 110 hospitals) • Model 3: Post-acute services, including readmissions (20 Awardees) • Model 4: Inpatient hospital and physician services (13 Awardees) • Retrospective, Model 1, 2, 3 • Prospective, Model 4
  • 9. • Savings: in Model 2, spending differences between BPCI and control group episodes in 2 out of 6 clinical categories • for orthopedic surgery (mostly hip and knee replacements), payments declined more • for spinal surgery, spending increased more • for other clinical categories in all BPCI models, no significant differences CMS MODELS REPORT
  • 10. • Quality: no differences on quality outcomes in most clinical episode groups. When differences detected, varied results by several factors • clinical episode groups (e.g., orthopedic, cardiovascular, etc.) • whether or not beneficiaries had a surgical procedure • whether or not beneficiaries received post-acute care • Provider Participation: 2 of the 4 models grew steadily, other 2 models experienced multiple withdrawals CMS MODELS REPORT
  • 11. TENNCARE MODEL • Principles: • Goal: Coordinated care • Accountability: QB is designated as accountable • Incentives: high quality and cost-efficient care is rewarded • 70+ episodes by 2020 • Wave 1 episodes • design period, 2013 • preview period, 2014 • performance period, 2015
  • 16. TENNCARE MODEL • Context for clinical exclusions and risk adjustment • Targeted inclusion of spend in the episode • Exclusion of episodes for business reasons • Exclusion of episodes of certain patients • Exclusion or winterizing of episodes with very high episode spend • Quality metrics • based on clinical input and practice guidelines • some quality metrics will be linked to gain sharing • others for information only
  • 17. Average cost per episode for each provider Cost per episode Example provider’s individual episode costs Risk-adjusted average episode cost for the example provider Example provider’s average episode cost Average Risk-adjusted costs for one type of episode in a year for a single example provider Low cost High cost Annual performance across all providers Individual providers, from highest to lowest average cost Gain sharing limit Commendable If average cost lower than commendable and quality benchmarks met, share cost savings below commendable line If average cost higher than acceptable, share excess costs above acceptable line If average cost lower than gain sharing limit, share cost savings but only above gain sharing limit If average cost between commendable and acceptable, no change This example provider would see no change. Acceptable TENNCARE MODEL Source: TennCare_Payment_Reform_Initiative.pdf
  • 18. TENNCARE MODEL REPORT • Cost Reduction in first year • $6.3 million • 3.4% in Perinatal care • 8.8% in Asthma exacerbation • 6.7% in Hip and knee replacement Source: https://www.tn.gov/tenncare/news/45975
  • 20. • Elevation Search Solutions • Vanderbilt Heart & Vascular Institute Thanks to our sponsors