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PT on the Run

Bundled Payments

Published January 23, 2014 5:18 PM by Michael Kelley

It sounds like a cable/Internet/phone special being offered by a cable company... but wait... this time the "cable company" is actually the Centers for Medicare and Medicaid Services!

Last year, CMS announced a new payment method called "Bundled Payments." Prior to this, for a given episode of care (for example: acute-care hospital stay, followed by a SNF stay, followed by home health care, followed by outpatient), each entity (the hospital, SNF, HHC agency, and outpatient company) were all paid separately for their services. Now CMS wants to try to bundle these payments into one big payment that's shared among the various entities involved in a patient's care.

The idea is that by having one payment, these entities can work more closely together to coordinate care across the spectrum and help reduce costs in the process, since each entity realizes the care they provide may affect how other entities are reimbursed and therefore how they themselves are reimbursed. It's a bit more complex than that, but I guess that's the "nutshell" version.

CMS opened up a "challenge," so to speak, where organizations are asked to develop plans to help reduce costs for various diagnosis codes. To use total joint replacements as an example, CMS will come up with a historical cost for a patient based on the last three years' worth of data and reimbursement rates. Then they will subtract 3%. This is the new "target price" they want the organization to design a plan to meet. If the organization reduces costs below this 3% threshold, the organization keeps 100% of the surplus. If they do not meet the 3% threshold, they owe CMS the difference. Again, perhaps overly simplified, but I'm not a business major, so cut me some slack.

This morning, I attended a meeting with an orthopedic group our hospital system works with. Basically their surgeons bring in patients and perform their total joint surgeries at our hospitals. We cover the acute care, then the patients are sent off to their preferred discharge location and further care is overseen by the original surgeon. This orthopedic group (which is comprised of both physicians and a comprehensive rehab team) has taken on the CMS challenge and created a plan to try to reduce costs for these total joint patients. The plan is ambitious to say the least, but has some serious potential to not only reduce costs, but also streamline care for these patients across the spectrum of rehab entities they may find themselves in.

Without getting into too many specifics, this is how it works: A physical therapist sees the patient pre-op and fills out a pre-op evaluation. It's essentially a questionnaire based on physical status, cognitive status, social factors, co-morbidities etc. This information is plugged into an algorithm that then helps determine the best plan of care for a patient after leaving the hospital (should he go to a SNF or home, when he should start outpatient therapy etc.).

This "care plan" is shared with everyone involved in the patient's care from the minute he leaves the hospital until he has completed his "recovery." By bringing everyone together, they believe they can help focus patients to discharge to the most appropriate location where they'll rehab the best, therefore achieving better outcomes in a more time-efficient and cost-effective manner. The end result being: a lower cost for the overall care beginning to end.

It's a bold idea, no doubt, but from my vantage point serves a good purpose. There are obvious barriers (the presenters today noted the "fee-for -service" model was the biggest among them). But by streamlining care and keeping everyone involved in that care (including the patient who has to sign off on the whole thing), perhaps we can have better outcomes and reduce costs to both the various rehab entities and CMS.

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Another way to cut costs is to have the SNF's and home health continue with the original evaluation from the hospital. Why should insurance pay for an eval that was used for three days and then pay for another eval when the patient goes home or to a SNF?  A skilled PT or PTA could continue the care without interruption or being bogged down by paperwork.  

jason marketti January 27, 2014 6:47 PM

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