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Bundling beyond hospitals

Published by Healthcare Finance News
Tammy Worth
February 3, 2014

Bundled payment programs have been creating buzz across the healthcare spectrum, but one area where they are relatively unproven is in post-acute settings.

The Alliance for Home Health Quality and Innovation, a nonprofit research foundation, recently released the Bundling and Coordinating Post-Acute Care toolkit to provide entities working in this environment an idea of what bundles might look like.

According to the organization, Medicare could save as much as $100 billion over 10 years if post-discharge care was restructured to be more cost-effective and clinically appropriate.

“Anecdotally among alliance members, there seems to be great interest in bundling,” said Teresa Lee, executive director for the organization. “We often hear very positive things and think at this point, home health providers understand that this is what is coming in the future.”

The move to that future took another step forward when, at the end of January, the Centers for Medicare & Medicaid Services (CMS) announced that 232 acute care hospitals, skilled nursing homes, physician group practices, long-term care hospitals and home health agencies have agreed to take part in CMS’ Bundled Payments for Care Improvement initiative.

The alliance’s toolkit offers a look at the bundled care future. Allen Dobson, president of Dobson DaVanzo & Associates, which created the toolkit, said they modeled what bundles should look like in the post-acute care setting and came up with a few salient points that would be needed to make them successful.

The care would run for 60 to 90 days, starting immediately after discharge. The bundle would include long-term care providers, emergency rooms and acute-care hospitals; they recommend excluding physician offices.

Dobson said they also found it beneficial to have a large catchment area, like a hospital referral region, in a bundle to ensure more actuarial stability. A larger volume of cases would help mitigate risk; a smaller one, like one hospital or condition, would increase risk.

“You have to be careful not to put providers in a position of incurring extreme losses … because one worries that could lead to access issues,” said Lee.

One of the key provisions of a successful bundled payment program is creating the position of a convener. This person or group would be responsible for accepting payments and providing oversight and care decisions throughout the post-acute settings.

For instance, if the Centers for Medicare & Medicaid Services quotes $50,000 for a care bundle and costs are $40,000, the convener would be responsible for distributing the excess. If the costs are $60,000, the convener would have to absorb the shortfall and determine how providers might take some of the responsibility as well.

Dobson said he has talked with some of the organizations taking part in Medicare’s post-acute bundling program and found that one major focus is avoiding hospital readmissions. Many of the providers are working to understand where a patient truly needs after leaving a hospital to avoid returning shortly thereafter. This is causing hospitals and other providers to look beyond their own doors into the community.

“They are looking at a whole array of possibilities to move through the system and what people are talking about is whether or not a person really should go to one provider or another,” Dobson said.