Bundled Payments for Healthcare Quality Improvement

Bundled PaymentsBundled payment initiatives to date have had different approaches to pricing. The majority of bundle initiatives have relied on provider claims as the primary payment mechanism using historical data to group charges related to the bundle condition and analyzing this information to arrive at an average appropriate charge for the bundle. This can be a time-consuming process without the right data analytic tools. This method uses data that is readily available and does not require the development of new billing or costing systems. However, the system still requires extensive gathering and analysis of data, and it can be challenging to ensure that analytic software is compatible with different claims databases. The Prometheus Bundled Payment Experiment, a program sponsored by the Commonwealth Fund and the Robert Wood Johnson Foundation, sought a solution to this hurdle and is focusing on creating software to automate this claims aggregation process.  The information that may not be available from claim-level data, however, is the quality or outcome measures tracked. To the extent that there are adjustments, warranties or risk adjustment protocols based on health state or clinical outcomes, clinical data will also need to be included in the analysis.

Claims level data also does not give much insight into the actual cost of providing the service. And true cost accounting systems are rare in healthcare. Some providers have attempted a bottoms-up cost analysis. UCLA used a combination of its own cost information, Medicare diagnosis- related group (DRG) billing information, and Medicare physician relative value unit tables to develop its bundle pricing. Crozer Keystone and three other participants in a coronary artery bypass graft (CABG) pilot conducted by CMS made major improvements to their cost accounting systems as a result of the bundle trial. Organizations such as M.D. Anderson Cancer Center at the University of Texas, Boston Children’s Hospital, Brigham and Women’s Hospital, Cleveland Clinic, Massachusetts General Hospital, Mayo Clinic, Memorial Sloan-Kettering, the University of Pittsburgh Medical Center, University of California–Los Angeles, University of California–San Francisco, and the University of Southern California have all launched time-driven, activity-based costing initiatives in an effort to more accurately price their bundles.

Once the bundles are decided upon and priced and contracts are in place, these new payment models will need to be operationalized. There will also have to be methods in place to identify participating patients and track all episodes of quality improvement in healthcare. It also will be necessary to determine needed changes in documentation, coding, claims submission, budgeting and allocation and distribution of payments to owned and contracted providers.

Bundled payments present a promising opportunity for payers and providers to collaborate in reaching a shared goal: a less-costly, more-efficient payment system that rewards value-based services and provides high quality care to patients.

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