JANUARY 31, 2012

Welcome to the Bundled Payment Update eNewsletter
This issue is sponsored by Medical Home Summit

CBO Finds only Bundled Payments for Heart Bypass Surgeries Reduced Average Spending by a Substantial Amount
For the four value-based payment system demonstrations reviewed by the CBO, only one of the projects -- involving bundled payments for heart bypass surgeries -- reduced average spending by a substantial amount. The three other value-based pay demonstrations -- involving physician groups, hospitals and home health agencies -- produced little or no savings. (American Medical News - January 30, 2012)

Bundled Payment Part of 6 Overarching Trends for Healthcare in 2012
New care models and health IT will demand attention and capital are one of six major trends in healthcare. Patient-centered medical homes, bundled payments, post-acute care management, meaningful use, ICD-10 and several other care innovations and health IT issues are certain to be at the forefront of any healthcare organization's 2012 initiatives, if they weren't already. (Becker's Hospital Review - January 6, 2012)

4 Problems With Bundled Payments
This article explores 5 issues that payment bundling raises for physicians. Bear in mind that hospitals will take different approaches and that potential involvement in bundling will vary with specialty. Physicians face a quandary over whether to accept bundled payments. Because hospitals and healthcare systems are taking the lead on bundling contracts, some independent physicians worry that most of the financial benefits will accrue to the hospitals. Other doctors are more concerned about losing some of their clinical autonomy. (Medscape - January 19, 2012)

Telehealth Reimbursement Will Grow, Health Leaders Say
Robert Jarrin, senior director of government affairs for telecommunications equipment provider--and a big player in mobile healthcare--Qualcomm, predicts a fairly rapid shift away from traditional volume-based reimbursement, thanks in part to wide acceptance of e-health technologies. Jarrin made the bold forecast that 25% of spending by the Centers for Medicare and Medicaid Services (CMS ) will move away from fee-for-service in the next five years, to things like the patient-centered medical home and bundled payments through accountable care organizations. That would affect more than $200 billion in health costs annually, based on CMS spending of $911 billion on care in federal fiscal year 2010 and $892 billion in fiscal 2011, either directly through Medicare or indirectly via Medicaid funding for states. (Information Week - January 19, 2012)

Number of Physicians Employed by Hospitals Snowballing
Traditionally, hospitals have hired physicians to lock in admissions and boost the use of hospital-based tests and diagnostic imaging, but the passage of healthcare reform in 2010 gave them new reasons to collect MDs and DOs. The law offers an incentive for hospitals and physicians to team up in the form of accountable care organizations and earn bonuses for more efficient, higher-quality care. Bundled payments that hospitals and physicians share for inpatient care also promote togetherness. (Medscape News - January 24, 2012)

Healthcare Costs Reduced by $4.5 Billion, 24,820 Deaths Prevented at 157 Hospitals in National Initiative's First Three Years and Bundled Payment Plays a Part
In three years, 157 hospitals participating in the Premier healthcare alliance's QUEST: High Performing Hospitals national collaborative have saved an estimated 24,820 lives and reduced healthcare spending by nearly $4.5 billion. QUEST has been designed to align with federal and other private sector delivery system models, such as bundled payments and accountable care. (MarketWatch - January 18, 2012)

Poor Prognosis for San Francisco Health Clinics and Fears about Bundled Payments
Some public health experts have been optimistic that the trend of health clinics consolidating or closing because of the growing gap between the number of uninsured clients and funding would stop under national health care reform that takes effect in 2014. But after digging into Gov. Jerry Brown's proposed budget, others fear the situation could worsen before it improves. The governor's proposed budget would eliminate the prospective payment system, which reimburses federally approved nonprofit community health centers, and replace it with a bundled payment system, which makes installment reimbursements per patient. The details of how reimbursement rates would change are not clear, but the shift accounts for $55 million in savings in next year's budget. (San Francisco Examiner - January 17, 2012)

Mostashari Shares Vision of Health IT's Importance to the Futures of Bundled Payments
Farzad Mostashari, MD, national coordinator for Health IT, suggests that new payment models, such as accountable care organizations, patient-centered medical homes, bundled payments and quality measurement/improvement initiatives may seem disconnected from each other, but they all have a common denominator: Success depends on better information about each patient's health needs than paper records can provide. (Cardiovascular Business - January 27, 2012)

CMMI's Bundled Payments for Care Improvement Initiative

The Bundled Payments for Care Improvement initiative seeks to improve patient care through payment innovation that fosters improved coordination and quality through a patient-centered approach. The CMS Innovation Center is seeking applications for four broadly defined models of care. Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively.

To update or remove your address, please click the "Unsubscribe/Manage" link below or email your request to: listmgr@HealthcareeNewsletters.com.

Bundled Payment Update e-Newsletter is one of a family of free e-Newsletters providing a complimentary video presentation and regularly updated news and key resources on major health care issues such as ACOs, patient safety, pay for performance, comparative effectiveness, readmissions, and Medicaid. To view and subscribe to other e-Newsletters go to www.HealthCareeNewsletters.com.

Accelerating High-Value Healthcare

Robert Mechanic, MBA
Heller School of Social Policy and Management, Waltham, MA