JUNE 13, 2012

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

AHA Pushes IRS to Update Private-use Rules so ACOs, Bundled Payments Are Not Hampered
In a letter to the Internal Revenue Service the American Hospital Association reported that significant complications and obstacles are preventing the implementation of accountable care organizations, bundled payment and other new models. Among the concerns raised in the letter are conflicts with the limitations imposed on the use of facilities financed with tax-exempt bonds. (Inside Health Policy, May 11, 2012)

HFMA Comments on CMMI Bundled Payment for Care Improvement Initiative
In a detailed letter to the Center for Medicare and Medicaid Innovation (CMMI) the Healthcare Financial Management Association (HFMA) is urging revisions to CMMI's Bundled Payment Initiative. The letter says that both the limited quality information and the lack of financial incentives for beneficiaries poses significant risk to providers and suggests that mechanisms be developed to both allow and facilitate providers ability to market their bundled services directly to beneficiaries. (Hospital Financial Management Association, May 24, 2012)

Bundled Pay in Tennessee Spotlight
The announcement by BlueCross BlueShield that has reached bundled payment agreements with Vanderbilt University Hospital and three Nashville area orthopedic groups (The Tennessee Orthopaedic Alliance) is attracting much attention and generating enthusiasm. The agreements establish a single payment for total knee and hip replacements including after care and rehabilitation. (Nashville Business Journal, May 25, 2012)

Former, Current Administration Officials Urge Speedier Pace for Adopting Reforms
In a panel discussion sponsored by the Center for American Progress (CAP), a liberal think tank, Ezekiel Emanuel, a senior CAP fellow and former advisor to President Obama, said more federal deadlines are need and that bundled payments should be implemented not simply the subject of experiments. Richard J, Gilfillan, the director of the Center for Medicare and Medicaid Innovation, echoed Emanuel's comments and said while some hospitals and health systems are involved in transformation more are not engaged. "We should look CEOs in the eye and say, 'The country needs you now.'" (Bloomberg BNA, May 23, 2012)

Commercial PPO Episode Selection and Definition in IHA's Bundled Episode Payment and Gainsharing Demonstration
This Issue Brief from the Integrated Healthcare Association outlines the processes in use for their multi-payer demonstration of bundled episode-of-care in California hospitals. Details are provided for procedure selection the definition of an episode. An example of a total knee replacement is provided for a commercial PPO population.(Integrated Healthcare Association, May 2012)

Healthcare Waste Accounts for a Third of All Spending, Government Official Says
Daniel R. Levinson, Inspector General of the Department of Health and Human Services, said at a recent conference that of the $3 trillion spent on health care as much as 30% is waste. The move to more coordinated care models, value-based payments and bundled payments are likely to help reduce both waste and fraud, he said. (McKnight's, May 2, 2012)

Former CMS Chiefs Want SGR Repeal
Gail Wilensky, Bruce Vladeck, Mark McLellan and Thomas Scully each testified before the Senate Finance Committee on May 10th that the current Sustainable Growth Rate (SGR) is unfeasible. McClellan suggested that more bundled payments should be among the fixes. (Fierce health Finance, May 15, 2012)

Massachusetts Moves Toward Health-Care Price Controls. Is America Next?
After Governor Patrick of Massachusetts effort to force insurers to stop raising premiums led to huge insurer losses he has shifted his focus to provider prices. His legislation, "The Health Care Quality Improvement and Cost Reduction Act of 2012," is gaining national attention. This focus on prices is framing the discussion of a further shift from price of items to the price of events or episodes. (Forbes, May 6, 2012)

Using Care Bundles to Improve Health Care Quality

This white paper from the Institute for Healthcare Improvement describes the history, concepts and outcomes associated with the use of bundles and reflects on what has been learned, offering suggestions for further research and implementation.

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The Opportunity for Episode Bundled Payment

Paul Ginsburg, PhD
Center for Studying Health System Change, Washington, DC