As value-based programs continue to expand in adoption, providers who are not participating need to determine how to get involved as quickly as possible. Ignoring this trend is no longer an option. This webinar will present a practical approach to designing, implementing, and operating a successful bundled payment program leveraging “lessons learned” and applying real-world experiences. The discussion will cover: • Overview of bundled payments • Initiating your bundled payment project • Bundle design • Contracting models • Workflow issues • Cost tracking and management • Monitoring performance and program expansion About the Speaker: sheldonSheldon Hamburger serves as a Principal of The Aristone Group, a Raleigh, NC based healthcare consulting group. With focus on helping healthcare enterprise organizations address emerging trends, Aristone provides expertise in strategy, process, and technology. With over 30 years of experience in developing and marketing healthcare technology products and services, Mr. Hamburger’s career includes various “firsts” in medical and pharmaceutical financial processing systems including electronic claims and payment applications. His solutions have been adopted by some the country’s largest companies and he continues to spearhead developments in healthcare technology applications. Hamburger earned a bachelor’s degree in Computer Engineering from the University of Michigan. His career includes service on numerous professional and nonprofit task forces and committees.

1. A Practical Guide
to Implementing
Bundled Payments
July 15, 2014
Sheldon Hamburger

2. If you remember just one thing…..
Your next CFO isn’t coming from
General Ortho, General Surgery, or General Hospital.
Your next CFO is coming from
General Dynamics, General Motors, or General Electric.

3. Great news!
•Everything’s getting better
•And cheaper
•And more accessible

4. Bad News….

5. 2013 Study – How patients choose Drs
Choose Dr Choose TV
Acceptance of insurance
plan
Cost
Bedside manner/empathy Customer service
Proximity of office to home,
work, or school
Location
Convenient office hours Store hours

6. What Are Bundled Payments?
Bundle – all services provided during an
episode for which “you” are financially
responsible

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

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

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

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

11. Getting Started
• Secure project champion – visionary
• Creating a culture – care transformation
• Develop multidisciplinary team
– Gain physician “buy-in” early and often
– Bring in everyone including patients
• Establish baselines – gather historical data
• Identify key success factors / KPIs
• Build cost accounting models at case level

12. Determining Bundles
•You’re building models
•Acute vs. chronic situations
•Limiting exposure while maintaining quality
•Clinical/finance involvement in design
•Redeveloping care models
•Adding services (non-medical, too)

13. •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
Determining Bundles

14. •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”?
Determining Bundles

15. •Many answers (currently) in claims data
– The only structured data source we have
– Your internal systems (billing)
– Business partner (payer)
•Commercial products can help
•Data sharing leads to new insights
– Analytics to ID hi and lo risk cases
Determining Bundles

16. 0
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#ofPatients
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Model Reimbursement PAC Reimbursement # Pats
Determining Bundles

17. •Redeveloping care models
– Review current models
– Industry clinical protocols & your best practices
– Quality metrics (KPIs)
• Reduce avoidable complications
– Financial ramifications (KPIs)
• Cut the “fat”, maintain/improve margin
Determining Bundles

18. • Who is the contracting agent with the payer?
• What is the scope of the bundle?
• More scope = more risk, control, upside $
• Including non-medical services in bundles
• Joint ventures, PHO, mergers, etc.
• Legal structure / governance / policy
• Stark, RICO, safe harbor, anti-trust, state reg’s
• Alignment of interests/payments
Contracting

19. • Opportunity to remake the rules
– Create “steerage”
• Gainsharing and withhold models
• Employer-provider contracting bypassing
insurance companies
• Physician directed models – the hospital as a
resource
• Patient/provider contracts
Contracting

20. • Gainsharing and withhold models
– Parties share “savings”
– Spend reductions from established threshold
– Billing FFS with periodic “true-up”
– My claims vs. your claims
– Other claims?
– Indemnification
– Distributing “savings”
Contracting

21. • Employer-provider contracting
– Bypassing insurers
– Employer is now the payer
– No claims - how to bill this?
– Provider = vendor (from employer view)
– Provider can directly solicit business
Contracting

22. • Physician directed models
– Physician is the contracting agent
– The hospital as a resource
– Buying hospital nights, OR hours, etc.
– How to bill this?
Contracting

23. • Other services
– Commonly travel today
– Could be gym, nutrition, Rx
– Linking these costs with cases
• Patient/provider contracts
– Patients are “out of control”
– Binds patient compliance with bundle rules
– Non-compliance gives provider recourse
Contracting

24. • Excluded conditions
– BMI > 33, A1C > 6.5, anemia
– Significant depression/drug use/abuse
• Excluded services
– Inpatient/outpatient rehab
• Warrantied services
– Readmission related to surgical site issues
• Contingencies
– Drug availability: brand vs. generic
Contracting

25. Workflow

26. • Operating both FFS and BP treatment models
• Operating both FFS and BP billing models
• Lack of standards in bundled payments
• Limited “lessons learned”
• Successes are a competitive advantage
Workflow

27. •Treating bundled patients
– Changing care pathways
– Educating staff (internal & external)
– Changes to EMR, financial, other systems
• Avoid introducing separate systems/flows
• Maintain “single point of truth”
• Support multiple models
– Patient support tools
Workflow

28. •Treating bundled patients
– Different than traditional patients?
– Yes and no
– Standardized care benefits everyone
– Dedicated case management
– Discharge planning / review of systems
Workflow

29. •Treating bundled patients
– Ongoing tracking of
• Costs/activities/services
– Ultimately, the models tend to merge to
a single one for BP and FFS
Workflow

30. Workflow
•Billing bundled patients
– Effects on charge capture
– Not just for claims, but for costs
– Establish charge-cost relationship
– Consider cost capture mechanisms

31. Workflow
•Billing bundled patients
– FFS for some models
– “Dummy” 837
– “Conventional” invoicing

32. →
Workflow

33. Workflow
•Billing bundled patients
– Effects on payment processing
– No changes on FFS based models
– Withholds
– Booking bonus/savings payments
– Simple bill = simple payment

34. 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?

35. Workflow

36. Workflow

37. Workflow

38. •The key to profitability
– Reality: Healthcare lags in cost management
– New cost accounting methods and systems
– Understanding/allocation of costs
– Cost capture
Cost Management

39. Cost Management
•What are costs?
– Direct costs (implants, anesthesia)
– Indirect costs (administration, utilities)
•Cost allocation (to a case)
– Direct costs are one-for-one
– Indirect costs are more complex
– Activity-based cost accounting

40. Cost Management
•Cost reduction issues
– Understanding current costs
– Cost reduction:
• Standardizing care saves money
• Improved purchasing/negotiations
• New protocols

41. Cost Management
•Cost elimination issues
– Holy grail of cost efficiency
– Removing steps from the process
• Eliminate the step
• Combining steps into one
– Eliminate intermediaries – disintermediation

42. Cost Management
•Cost (not charge) capture
– Continuous process
– Charge-cost relationship
– Real time capture/feedback
• System/process changes
• Supply usage, event capture

43. Cost Management
•Other cost issues
– Expanding the bundle process to FFS
• Reduces revenue, also!
– Bundling can increase (add) costs
• Broadening the scope of services
• ↑ costs & ↑ revenue

44. Monitoring Performance
• Questions:
– Are we making money?
– Where are the outliers/PACs & 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?

45. Monitoring Performance
•Continuous improvement feedback loop
– Quality measures/KPIs - defined, now use them
– Clinical:
• Readmission rates, SCIP scores
• Surg. site infection rate, length of stay
• Patient vs provider assessment

46. Monitoring Performance
•Continuous improvement
– Financial:
• Average cost/case, margin/case
• % outlier cases
– Customer:
• Satisfaction index/outcomes

47. Monitoring Performance
•Continuous improvement
– Case management
• Early intervention avoids adverse exposure
• Tools to support case managers
• Monitor internal and external (patient)
performance
– Predictive analytics

48. Monitoring Performance
•Continuous improvement
– Ongoing analysis/corrective action for outliers
• Shifts more patients into the bundle
0
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49. Monitoring Performance
•Continuous improvement
– Using results to renegotiate payer contracts
• Get out in front of this
• Today’s threshold/price = tomorrow’s memory

50. We’re ready to go!
•Getting started
•Determining bundles
•Contracting
•Workflow
•Cost management
•Monitoring performance

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