Catalyst for Payment Reform

Recommended Reading: CAPG case studies on risked based payment reforms

Recommended Reading: CAPG case studies on risked based payment reforms

CAPG, an association representing physician organizations who practice capitated, coordinated care, recently put out a guide to alternative payment models (APMs) that includes a series of case studies on various types of risk based, coordinated care.

The guide contains helpful descriptions of the various ways providers are being paid and we thought it would be helpful to provide a summary of one of the key programs they spotlighted:

  • WHO? We are interested in the bundled payment program at Providence Health & Services, a not-for-profit health system with 35 hospitals, a health plan, and 475 physician clinics, among other facilities and programs. Its not-for-profit health plan issues or administers health coverage for more than 500,000 members through commercial group, Medicare Advantage, Medicaid, and individual/family plans in Oregon and Washington
  • WHAT? With both Commercial and Medicare Advantage, Providence has created a bundled payment program for episodes of care involving joint replacements. The episodes stem from 30 days prior to surgery, include the surgery itself, and carry on through 90 days post surgery.
  • HOW? Providence’s own health plan negotiated the price for the bundle based on a 2% discount off of historical spend. Payers make traditional fee for service and shared savings payments to hospitals. If hospitals spend less than the target price for the bundle, they share savings 50-50 with the physicians.  The physicians are also paid fee for service plus shared savings, but bear no downside risk.  For physicians to share in savings, they must:
    1. Submit claims totaling less than the bundled price
    2. Perform well on five surgical care improvement project (SCIP) measures; and
    3. Meet individual quality gates per case (e.g., no mortality, no preventable readmission).
  • RESULTS? Providence feels the program has allowed physicians to grow their practices and remain independent and to improve on measures of efficiency and quality. Patient outcomes have also improved along certain metrics such as length of stay, discharges direct to home, functional improvements and patient satisfaction.
  • ONE CATCH! A catch with the program is that as physicians become more efficient, there are fewer shared savings to be had – diminishing the positive incentives. Furthermore, Providence feels it still needs more granular data to provide physician-level and patient level adjustments to the bundles and that they cannot afford the software they would need to accept prospective bundled payments.

Learn more about bundled payments and other alternative payment models by enrolling in CPR’s 200-Level Online Course: Strategies for High-Value Healthcare Purchasing!

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