Medicare bundled payments

This Wednesday Rep. Diane Black (R-Tenn.) and Rep. Richard Neal (D-Mass.) proposed legislation that would expand bundled payments within the Medicare program. The Comprehensive Care Payment Innovation Act would establish a voluntary bundled payment model, building off the Bundled Payments for Care Improvement initiative, which is currently in effect. CMS has piloted BPCI and other bundled payment programs during the past 25 years. The new program would go into effect Jan. 1, 2015. Under the proposed legislation, hospitals and other providers would receive a lump payment from Medicare for all services furnished from three days prior to an inpatient admission to 90 days after discharge. Covered services include acute inpatient care, physician services, outpatient hospital services and post-acute care such as home health and skilled nursing. Providers could choose the bundled payment program from six conditions: hip/knee joint replacements, lumbar spine fusion, coronary artery bypass graft, heart valve replacement, angioplasty with a stent and colon resection. The bundled payments would also be tied to quality measures, such as mortality, patient outcomes and avoidable readmissions.

Sooner rather than later, something like this bill is going to become law. This proposal and all the pilot projects currently underway focus on specific diagnoses—most of which have little relevance to OCH; however, I believe that the bundled payment surrounding an inpatient admission will some day be the rule for all inpatient admissions. There are things both good and bad about it for OCH. Since the bundled payment will be based on a blend of costs historically incurred at all health systems for a given diagnosis and since OCH is a low cost health system, we will actually benefit from that aspect of a bundled payment. On the negative side, the bundled payment will include a number of days post discharge and a disproportionately heavy percentage of our inpatient admissions come from nursing homes and return to skilled nursing beds in those homes. We have little control over how much money Medicare spends in those thirty days post discharge. Based on current data from the Medicare hospital compare web site, OCH directly spends significantly less of each Medicare dollar than other health systems but the total cost of care for patients admitted to OCH is actually slightly higher than the nationwide average due to the amount of money being spent post discharge from our hospital. We will have to find ways to address that anomaly in the future if we are to thrive under a bundled payment system.

MINUTE RANT: On the temporary fix addressed by the senate budget deal

Last week, the U.S. Senate passed a two-year budget agreement addressing spending cuts and reducing the likelihood of a government shutdown.

What does this mean for healthcare? MHA Today shared the following overview:

By a margin of 64-36, the U.S. Senate has passed a negotiated budget agreement that was approved by the U.S. House of Representatives last week. The three-month “doc fix” in the agreement includes a 0.5 percent increase in Medicare physician payment rates through March 31, 2014.This extension was to allow the House and Senate more time to complete a comprehensive overhaul of the sustainable growth rate formula. Other provisions include extensions of the Medicare low volume and dependent hospital payment programs through March 31, 2014, and extending Medicare sequestration payment adjustments for an additional two years. The agreement also includes eliminating federal fiscal year 2014 Medicaid DSH cuts and shifting the 2015 cuts into fiscal year 2016. Medicaid DSH cuts will now be extended another year to 2023.

The devil is always in the details... except when he is openly attacking with pitchfork in hand.