In recent years, large employers, physician groups, and commercial and governmental payers have been increasingly interested in the use of episode-based bundled payments as a mechanism to promote high-quality health care and smarter spending. A "bundled payment" occurs when a payer provides reimbursement to providers for a full range of care, rather than paying individual bills for parts of that care such as the surgery, physician fees, and post-acute care.
The Comprehensive Care for Joint Replacement model and the recently announced acute myocardial infarction and coronary artery bypass graft bundled payment programs are examples of Medicare's belief that alternative payment models are necessary to shift the current health care system from one that pays for volume to one that is based on value. Likewise, across the country, provider organizations and private payers are developing and implementing bundled payments for various conditions.
While many health care organizations see promise in bundled payment programs, very few have been around long enough to examine the true impact of these programs on quality and costs. The UCLA kidney transplant bundle (KTB) is one of the longest-standing bundled payment programs.
In the mid-1980s, UCLA began the program by negotiating a lump sum case-rate for all kidney transplantation services with Kaiser Permanente. Prior to the development of the KTB, all hospital costs, organ acquisition costs, outpatient medications, and physician services were reimbursed by Kaiser Permanente in a traditional fee-for-service fashion.
Today, multiple large commercial payers, including Kaiser, United Healthcare, and Anthem participate in the UCLA KTB. The duration of the episode used for the KTB is 90 days, and the case-rate is determined by examining historical costs for inpatient and physician services, respectively. Under the KTB the hospital receives 80 percent of the lump sum payment and physicians receive 20 percent. Kidney transplant surgeons and nephrologists share equal reimbursement from a fixed per-patient per-episode pool. Other physician services (for example, anesthesia, radiology, and pathology) are deducted from this pool. The KTB also includes "stop-loss coverage," which is triggered when length of stay or dollar amount thresholds are reached whereupon the contracting payer would share a portion of the cost, to account for extreme cost outliers.
More than 30 years following inception, we reviewed the UCLA KTB in the context of a changing reimbursement paradigm and the emerging role of alternative payment models. The following are five lessons we learned in the process.
Bundling will improve care coordination and multi-disciplinary care
The most important consequence of KTB is the subjective yet palpable multi-specialty clinical integration. Due in part to the shared risk among physicians, the urology [transplant surgeons] and nephrology teams work closely together. The teams share a workroom in the hospital and in clinic and are in daily communication about patients.
Because all stakeholders are at risk for reduced reimbursement resulting from readmissions, careful follow-up and patient and family education are stressed. Both the current and former directors of the kidney transplant program at UCLA—Hans A. Gritsch and J. Thomas Rosenthal, respectively—agree that excellent coordination and multi-disciplinary care stemmed from KTB. In an interview, Dr. Rosenthal commented that, "the greatest benefit of bundled pricing… [is that it] encourages physicians to work together in groups, which is essential to effective care delivery."
Bundling will encourage efficient utilization of health care services
The physicians and administrators involved in setting up KTB are heavily invested in care redesign. They began with what would today be called "process mapping" to define care pathways, identify waste, and decrease variation in care. Process mapping is a method of analyzing the entire workflow of an episode of care in a step-by-step fashion. By redesigning inefficient care pathways and implementing protocols to reduce variation, stakeholders realized impressive improvements in clinical outcomes and process measures.
For example, within three years of the KTB rollout cold ischemia time (time from organ harvest to kidney transplantation) dropped from 28 to 17 hours, rates of delayed graft function decreased from 30 percent to 15 percent, length of stay was cut from 17 to seven days, and per-case costs were reduced by 12 percent. These measures continue to improve today with a length of stay frequently as short as three days.
Bundled payments will incentivize quality improvement
Most bundled payment programs include a mechanism to tie reimbursement to quality. The KTB contract is renegotiated every three years. Cost and quality data are heavily scrutinized during that process which incentivizes a culture of continuous quality improvement.
UCLA's adoption of the electronic medical record helps facilitate the quantitative infrastructure for quality measurement. UCLA has had among the best graft survival rates in the country, and many believe this is in part due to the fact that outcomes are closely tracked.
The episode definition probably doesn't matter as much as we think
Early in the KTB experience, extensive consideration was given to the duration of the bundle (60 versus 90 days), exclusions for unrelated services (i.e. hip fracture two months post-transplant), and carve-outs and modifiers for complexity or comorbid conditions. Episode duration was ultimately set at 90 days post-transplant, although bundle pricing was not significantly different comparing 60 and 90 days.
After extensive retrospective review investigating historical causes for UCLA's kidney transplant readmissions, the organizing KTB director found that unrelated service readmissions were exceedingly rare. While reoperation and comorbid conditions are clearly associated with higher cost and higher complication rates, the complexity and administrative burden to both the health system and the payer was too cumbersome to create multiple different exceptions. In fact, the initial KTB experiment included several specific carve-outs but upon retrospective modeling, these exceptions came up so infrequently they were eventually thrown out.
According to UCLA's contracting division, negotiations are where bundled payments go to die. M. Susan Ridgley and coauthors make this point particularly salient in recounting a failed bundled payment demonstration in California The authors describe apprehension in financial exposure on the part of hospitals and physicians. This led to excessive carve-outs and detailed negotiations, which decreased the number of eligible patients and made the proposed bundled payment demonstration impotent. The best protector for providers is the stop-loss provision with robust data-driven analysis of the bundle post implementation. This allowed KTB stakeholders to take on greater risk without every detail of episode definition ironed out a priori.
The administrative complexity will be burdensome
Alternative payment models represent a potentially exciting modality by which health systems can begin the 180-degree transition from fee-for-service to value-based health care. Population-level risk can be overwhelming and bundled payments may be a gentle intermediary.
The administrative complexity of this first step, however, cannot be understated. The Office of Transplant Services at UCLA directs funds toward appropriate hospital and departmental agents for both KTB and non-KTB contracts. Added contract complexity leads to higher billing costs for both providers and payers. Despite 30 years of experience with this arrangement, it remains an administrative challenge.
New Challenges Ahead
Los Angeles county is one of 67 metropolitan statistical areas (MSAs) designated as mandatory participants in Medicare's CJR. Like other health systems, UCLA is grappling with adapting to changing reimbursement paradigms vis-à-vis the CJR rollout. Despite 30 years of experience with bundled payments, CJR presents unique operational challenges to be considered relative to the KTB.
First, the deeply rooted care coordination infrastructure was present in kidney transplants in some form prior to deploying the KTB. Second, post-acute care services do not feature a prominent role in KTB where as rehabilitation and/or skilled nursing facilities are expected to critically impact the CJR model.
Despite these differences, the above five lessons transcend surgery type and disease state. As payers and policymakers continue to expand and implement bundled payment models, it will be critical to evaluate the successes and failures of the past.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2d8AaFB
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