bundled payments: the impact on it april, 2014
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Bundled Payments: The Impact on IT April, 2014. If you remember just one thing…. Your next CFO isn’t coming from the health industry. Your next CFO is coming from industrial USA. The Commoditization of Healthcare. Great news everything’s getting better and cheaper and more accessible - PowerPoint PPT PresentationTRANSCRIPT
Bundled Payments:The Impact on IT
April, 2014
If you remember just one thing…..
Your next CFO isn’t coming from the health industry.
Your next CFO is coming from industrial USA.
The Commoditization of Healthcare
• Great news – everything’s getting better – and cheaper– and more accessible
• Bad news – providers are a dime-a-dozen
Your New Bag of Tricks
→Differentiators in offerings→New reimbursement models
→Bundled payments
What Are Bundled Payments?
• Episode - all services provided to a patient related to a specific medical problem in a limited timeframe
• Bundle – all services provided during an episode for which “you” are financially responsible
“Fixed
price”
What Are Bundled Payments
EpisodesCABG Gall BladderColonoscopy
Joint Arthroscopy
C-Section Joint ReplacementEndoscopy Pregnancy/Deliver
What Are Bundled Payments
Chronic Conditions
Asthma DepressionCAD DiabetesCHF GERDCOPD Hypertension
The TheoryCost savings by shifting risk Being closer to the care, the
provider can drive efficiencies
Nothing new here
The Reality
→This time it’s different→Commoditization makes this possible
→That’s what’s new….for healthcare
Why Participate?Profitable – if you can figure it out
First one to success sets the stage
Capture market share
Increase market size
If I Don’t Participate?
•Lose patients•How many patients do you have to lose to be out of business?
•30%, 20%, 10% ?
Planning/executing your project
•Getting started•Determining bundles•Contracting•Workflow•Cost management•Monitoring performance
Getting Started
• Secure project champion• Develop multidisciplinary team
– Gain physician “buy-in” early and often• Identify key success factors• Identify key performance analytics (KPIs) • Establish baselines – gather historical data• Build cost accounting models for case tracking
Determining Bundles
•You’re building a model(s)•Acute vs. chronic situations•Limiting exposure while maintaining quality •Clinical/finance involvement in design•Redeveloping care models
Determining Bundles
•Where to start?– What you’re good at– What you can control– Areas of excellence / best practices– MS-DRG if you’re a hospital– High volume
Determining Bundles
•Questions to answer– What products/services are in/out?– What have we done in the past?– What is redundant/unnecessary ?– Where can we leverage control?– What causes “outliers”?
Determining Bundles
•Many answers (currently) in claims data– The only structured data source we have– Your internal systems (billing)– Business partner (payer)– CMS data
•Start and end point (warranty)•Commercial products can help
Determining Bundles
•Example analysis1. Extract historical claims related to bundle
• Requires a claims-based bundle definition2. Calculate total reimbursement per patient
• Use target date range window (e.g., 180 days)
• This will begin to give you an idea of a target reimbursement for the episode.
Determining Bundles
•Example analysis3. Segregate model claims from potentially
avoidable claims (PAC)• Model claims are those experienced for
the “typical” patient• PACs are those that can potentially be
eliminated due to issues such as comorbidity or errors
Determining Bundles
•Example analysis4. Sum/average in ranges of 10% of target
• If target is $25,000/episode, sort by ranges of $2,500
• See example on next slide
Determining Bundles
0-500
0
$12,50
0
$17,50
0
$22,50
0
$27,50
0
$32,50
0
$37,50
0
$42,50
0
$47,50
0
$52,50
0
$57,50
0
$62,50
0
$67,50
0
$72,50
0$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
0
500
1000
1500
2000
2500Model Reimbursement PAC Reimbursement # Pats
Total Reimbursement Ranges
Tota
l Rei
mbu
rsem
ent
# o
f Pa
tient
s
Notes:• One can see that most patients fall under $30,000.• Above $30,000, PACs increase dramatically while patient count
drops equally.
Determining Bundles
•Example analysis5. This gives a general target of current
reimbursement for the episode.6. From here, drill down to determine:
• What can be eliminated from the model• Current costs / how to reduce• How to systematically identify the
outliers (those episodes above $30K in our example) to exclude in the contract.
Determining Bundles
•Redeveloping care models– Review current models– Specialty clinical protocols– Best practices…for you– Financial ramifications
Determining Bundles
• IT impacts– Identifying data sources– Data aggregation from disparate sources– Defining/acquiring/developing analytical tools– Ongoing analysis to refine bundle definition
process
Contracting
• Gainsharing and withhold models• Employer-provider contracting bypassing insurance companies
• Physician directed models – the hospital as a resource
• Including non-medical services in bundles• Billing for bundles in a fee-for-service world• Patient/provider contracts
Contracting
•Examples of excluded conditions– BMI > 33, A1C > 6.5, anemia– Significant depression/drug use/abuse
•Examples of excluded services– Inpatient/outpatient rehab
•Examples of warrantied services– Readmission related to surgical site issues
Contracting
• IT impacts– Tracking/analyzing historical data– Directing/receiving bills to/from multiple parties– Billing for bundles in a fee-for-service world
Workflow
•Clinical and IT– Operating both FFS and BP treatment models– Operating both FFS and BP billing models– Standards (and lack of) in bundled payments– The effects of bundles on analytics
Workflow
•Treating bundled patients– Different than traditional patients?– Case management– Ongoing tracking of costs (services)
Workflow
•Billing bundled patients– Effects on charge capture– Automation of different billing models
• “Dummy” 837• “Conventional” invoicing
– Effects on payment processing
Workflow
•The effects of bundles on analytics– Example: pro-rating payments
•Metric: average reimbursement for a service
– FFS: 835 ties payment to service– BP: What portion of payment is assigned
to a service?
Workflow
Workflow
Workflow
Workflow
• IT impacts– EMR identifying and tracking BP patients– Ongoing feedback on BP case progress
• Wholesale changes to charge capture?– Billing/invoice processing– Payment processing
Cost Management
•The key to profitability– Cost accounting methods and systems– Issues in tracking costs by case– Standardizing care to leverage purchasing
and reducing costs– Expanding the bundle process to FFS– Broadening the scope of services
Cost Management
•Question:– How do we know if we’re making money?
•Answer:– If revenue exceeds cost.
Cost Management
•What are costs?– The usual suspects (payroll, supplies, …..)– Direct costs (implants)– Indirect costs (administration, regulatory)
•FFS ties direct costs (implants) thru billing– Sometimes
•Reality: Healthcare lags industry in cost management
Cost Management
•Cost management/reduction issues– Understanding current costs– Cost reduction: standardizing care– Cost elimination: process change– Expanding the bundle process to FFS
• Reduces revenue, also!– Broadening the scope of services
• ↑ costs & ↑ revenue
Cost Management
•Questions– Where can we influence clinical behavior to
drive cost (down)?– How can we model volume against
profitability?
Cost Management
• Issues– Collecting granular data at the expense of
identifying key cost drivers– Support of changing BP models with lessons
learned – flexible cost accounting model– Consistency and timeliness
Cost Management
•Keys factors– Strike a balance: translate/crosswalk finance
level to/from patient level views– Line managers have info on source systems
for data feeds– Charge level costing models: time/activity
based, RVU, direct?
Cost Management
• IT impacts– Cost management system implementation– Ancillary support systems (e.g., surgical trays)– System integration
Monitoring Performance
•Continuous improvement– Case tracking/intervention avoids adverse
exposure– Quality measures/KPIs– Ongoing analysis/corrective action for outliers– Using results to renegotiate payer contracts– Who owns the results? Actionable but who
takes action?
Monitoring Performance
• Questions:– Are we making money?– Where are the “exceptions”/how to avoid?– How can we squeeze/eliminate costs?– What are the opportunities for more revenue?– Are my “customers” happy?– Can we renew our contracts with better terms?
Monitoring Performance
•Examples of Clinical KPIs:– Readmission rates– SCIP scores– Patient otutcomes
Monitoring Performance
•Examples of Financial KPIs:– Average cost/case, margin/case– ROI– Cost reduction metrics– YoY, per case metrics showing change, not
snapshots in time
Monitoring Performance
•Examples of Customer KPIs:– Satisfaction index– Outcomes
Monitoring Performance
• IT impacts– Exception reports/alerts in “real time”– Regular/on-demand performance analysis
reports– Quality measures: capture, analyze, report
