Today’s Opportunities within the ACA

Was the goal of the Affordable Care Act (ACA) to free up $1 trillion dollars for tax reforms? Was the goal to improve access to care by providing universal healthcare coverage for all Americans? Or was the goal to make healthcare better?

 

Principally inspired by the ACA, in May 2018 United Healthcare announced its intent to expand its spine surgery bundled payments program from 28 markets to 37 markets. United Healthcare has seen a 22 percent decline in readmission rates, a 17 percent reduction in complication rates, and cost reductions totaling approximately $3,000 per case in the spine surgery population after implementing bundled payments. These findings are not unique, in fact they are very consistent with the growing body of literature to support bundled payments as a viable alternative to fee-for-service, which is costly and incentivizes duplication and waste. Additionally, later this year hundreds of hospitals and doctors will commence participation in the Centers for Medicare and Medicaid Services’ Bundled Payments for Care Improvement Advanced program. Employer sponsored bundled payment programs continue to evolve with both national and regional employers.

 

In America the average life expectancy is 80-plus years, nearly 30 years longer than a century ago. Medical progress in the United States has been undeniable. We have reduced infant mortality rates twenty-fold and we tackled the biggest killer of women—child birth, virtually eliminating child birth-related deaths over the last century. Similarly, in the area of payment reform, between 2012 and 2016 the percent of CMS payments to providers caring for patients in Alternative Payment Models (APMs) went from 0 percent to 30 percent, representing $200 billion dollars.[1] Despite this progress and paying nearly double than other wealthy nations for healthcare, in 2018 health outcomes are still unreliable at best. In fact, medical errors today represent the third leading cause of death in the United States after heart disease and cancer.[2]

 

While we are often quick to point to the complexity of the U.S. healthcare ecosystem as the root cause, it doesn’t fix the fact that two million Americans will get a hospital-acquired infection this year. It also doesn’t fix our lack of understanding as healthcare providers of just how addictive opioids are, which has been a major factor contributing to the opioid epidemic in America.

 

While there are major areas where we have made progress, the great opportunity today for board members and senior executives is to support and resource efforts that augment front-end discovery with systems innovation and the science of process engineering on the back end.

 

 

This post was originally published in a special section for the Governance Institute, under the title, “The 21st-Century Patient Is More Complicated but the Remedies Don’t Have to Be: How Bundles and Other Innovations in Healthcare Payment Are Offering New Promise for Care Delivery,” by Deirdre M. Baggot, Ph.D., M.B.A., RN.

 

 

[1] Centers for Medicare & Medicaid Services (CMS), “Alternative Payment Models (APMs) Overview,” 2017 (available at CMS.gov).

[2] Martin Makary and Michael Daniel, “Medical Error—The Third Leading Cause of Death in the U.S.,” BMJ, 2016.

Questions to Ask About Your Hospital’s Bundled Payment Strategy

In the United States, we have over 60,000 different diagnoses, more than 6,000 drugs, and more than 4,000 surgical techniques and procedures that we are attempting to deploy – regardless of the recipient’s ability to pay. In any given city, providers typically receive payments from as many as 60 or more payers, all paying completely different. And for patients with a chronic condition, the current system is so administratively burdensome that patients report feeling overwhelmed simply with the number of bills they receive each month.[1] Fee-for-service isn’t just expensive and unreliable, it is exhausting—for patients, physicians, and nurses.

 

With a bundled payment, however, one single payment is made for all of the care and services related to a specific clinical episode or condition. While bundled payments as a viable alternative to fee-for-service has been under investigation for more than 30 years, most studies in this reimbursement model have been in the areas of cardiac and orthopedic elective procedures due to their high overall total cost of care.[2] Largely influenced by the Affordable Care Act, over the last five years we have seen both private payers broaden their interest beyond elective procedures to include oncology care, post-acute care, and chronic disease bundles.[3] There has also been an increase in the number of studies in chronic diseases such as diabetes, asthma, and congestive heart failure, as well as oncology, maternity, and pediatrics.[4]

 

The role of bundled payments is only expected to grow. For board members and other senior hospital executives, it is important to understand what a smart bundled payment strategy looks like. This often means simply asking better questions. But, with a topic so broad and evolving, how do you know which questions are the right questions? Here are a few to help you get started:

  • Do we have a bundled payment strategy?
  • What evidence do we have that it is working? Is care delivery improving? Are costs going down? Are we making money?
  • Are physicians leading the effort and engaged in the work?
  • Do we have the technology to scale our efforts with employers and commercial payers?
  • Are we getting better at managing total cost of care, and if so, how do we know that?
  • What percent of our reimbursement portfolio should be comprised of new payment models?
  • Are our patients engaged?

 

 

This post was originally published in a special section for the Governance Institute, under the title, “The 21st-Century Patient Is More Complicated but the Remedies Don’t Have to Be: How Bundles and Other Innovations in Healthcare Payment Are Offering New Promise for Care Delivery,” by Deirdre M. Baggot, Ph.D., M.B.A., RN.

[1] Margarida Azevedo, “Pilot Program to Help CF Families Navigate Care Systems Reports Initial Success,” Cystic Fibrosis News Today, April 29, 2016.

[2] Deirdre Baggot and Cleo Burtley, “Bundled Payments: How Seemingly Small Innovations in Care Delivery Can Lead to Big Financial Rewards,” BoardRoom Press, The Governance Institute, April 2013; Peter S. Hussey et al., Bundled Payment: Effects on Health Care Spending and Quality: Closing the Quality Gap: Revisiting the State of the Science, Evidence Reports/Technology Assessments, No. 208, Agency for Healthcare Research and Quality, August 2012.

[3] CMS, APMs Overview, 2017.

[4] Laura A. Dummit et al., “Association between Hospital Participation in a Medicare Bundled Payment Initiative and Payments and Quality Outcomes for Lower Extremity Joint Replacement Episodes,” JAMA, September 27, 2016; CMS, “Notice of Proposed Rulemaking for Bundled Payment Models for High-Quality, Coordinated Cardiac and Hip Fracture Care,” 2016 (available at CMS.gov); CMS, “Episode Payment Models: General Information,” 2017 (available at CMS.gov); CMS, APMs Overview, 2017.