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15 Payments for Value Over Volume
Pages 473-492

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From page 473...
... Bertko applauds the successes of bundled payments in systems such as the Geisinger Health System but explains that bundled payments may not work in all cases. While this payment structure has succeeded in improving quality and lowering costs in Pennsylvania, the payment bundles pertain to very discrete and easily definable conditions, such as coronary artery bypass graft surgeries.
From page 474...
... Closing this session, Nancy Davenport-Ennis of the National Patient Advocate Foundation addresses the perspectives of patients in the discussion of bundled payments. Stressing the importance of including active patient engagement in decision making even in a new payment system, she raises the importance of educating patients about what these reforms mean for patients' out-of-pocket expenses; where the cost savings are going to go; and how a new payment system would impact patient access to the latest developments in medical treatment.
From page 475...
... Although bundled payments for acute episodes offer promise of incentives for efficiency, there are still many unresolved questions about the scale of this promise and the practical mechanics of making it work with providers. Private Payer Successes with Bundled Payments Geisinger's ProvenCare non-emergent coronary artery bypass graft (CABG)
From page 476...
... The most comprehensive bundle would include all four phases, but not all insurers have all components in bundled payments with every facility in the preferred network. Past Failures Some efforts with bundled payments may have been too ambitious.
From page 477...
... In many ways, if there is increasing provider and beneficiary accountability (e.g., accountable care organizations with a budget to manage) , bundled payments could be helpful.
From page 478...
... Summary Rapid adoption of a limited set of bundled procedures appears to be both possible and a good idea. Bundled payments for acute care episodes are practical and working today for a small number of procedures.
From page 479...
... The Medicare Participating Heart Bypass Center Demonstration The Medicare Participating Heart Bypass Center Demonstration was designed and implemented to test the cost effectiveness of a bundled payment for CABG surgery. Despite the considerable financial risk to hospitals of adopting a bundled payment system, numerous hospitals applied to participate and 4 out of 10 finalist hospitals began the demonstration in May 1991 in Georgia, Massachusetts, Michigan, and Ohio.
From page 480...
... This demonstration showed that complex, inpatient procedures with a defined inpatient stay and significant but standardized resource use, may be good candidates for a bundled payment program to achieve substantial cost savings and quality improvement. The Cataract Alternative Payment Demonstration Cataract surgery was among the most frequent procedures performed in 1988, and there was reason to believe that costs were not declining commensurate with volume increases and technological advances.
From page 481...
... Under its gainsharing demonstrations, Medicare continues to pay hospitals and physicians separately under the current feefor-service methodologies, but hospitals are permitted to provide incentives to physicians to reduce costs and improve quality outcomes. ACE Demonstration Recently, another bundled payment demonstration, the Acute Care Episode (ACE)
From page 482...
... HealthPartners Many policy experts advocate a move to bundled payment approaches to address the perverse incentives associated with fee-for-service payment systems. Despite near consensus among policy makers about the benefits of bundled payments, little practical experience informs the issues that may be encountered in implementing this strategy.
From page 483...
... Unfortunately, there has been limited consumer purchasing volume in the online marketplace so far. Until such time as this approach is a dominant market paradigm for purchasing care, we feel that it has very limited cost savings potential.
From page 484...
... Similar to AMI, the results of our analysis suggested limited opportunity to reduce total cost of care for procedure-based episodes. We understand from other Prometheus pilot sites and Prometheus staff that chronic conditions may offer better opportunities for reducing potentially avoidable care and therefore reducing cost of care in Minnesota.
From page 485...
... Tying Together the Lessons Learned These experiences in Minnesota demonstrate that the objectives of these conceptually similar efforts vary and that the cost savings potential of some of these models is controversial. • Systems dependent on transparency and consumer choice must have significant market share.
From page 486...
... Review of Howard Miller's presentation to the July workshop in this series, supplemented from experience with bundled payment in Minnesota, indicates that the design of bundled payment is a complex task that must be carefully executed to achieve the desired policy objectives. Although some would assert that "virtual integration" is a possibility for physicians to work with hospitals and other providers in prospectively managing bundled care across time and organizational boundaries, participants in designing care packages for carol.com or Baskets of Care for the State of Minnesota are reluctant to design bundles with components that are out of their organizational span of control.
From page 487...
... The various proposals for the development of accountable care organizations (ACOs) , if implemented, may go a long way toward creating the capability in the existing fragmented and disorganized care system to effectively manage bundled payments for care.
From page 488...
... For both federal and state policy makers, an overall model of payment reform that addresses the potential conceptual and operational conflicts between the medical home, accountable care organizations, and bundled payment initiatives is needed. Appropriateness of care needs to be explicitly addressed and incorporated into the design of the bundle.
From page 489...
... It will be important to provide a way for all to win if performance against cost and quality for patients is to be improved -- in both high- and low-performing regions of the country. PATIENT PERSPECTIVE AND PAYMENT REFORM Nancy Davenport-Ennis National Patient Advocate Foundation As we embark on the national discussion about health care and payment system reform -- its policy and politics -- it is critical that we attack the issue of bundled payments from the patient perspective.
From page 490...
... Fortunately, there are places that are more successful at patient engagement, and looking at the Geisinger Health System is informative in that regard. Bundling Clearly and Flexibly Beyond the issue of patient engagement, looking forward to payment reform and bundling requires attention to creating bundles that make sense.
From page 491...
... Yet their voices are often the least considered in the debate. As the direction of healthcare reform moves appropriately to bundled payments and the creation of coherent pathways of diagnosis and treatment, we must remember the needs of patients.
From page 492...
... 1987. Coronary artery bypass graft (CABG)


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