Business Consult | Katy Reed, MBA Senior Manager, ECG Management Consultants and Will Crane, Manager, ECG Management Consultants

In several previous columns, we presented a framework for success in the post-reform environment by describing the five key attributes of a value-based enterprise. To date, the transition to value-based care has been driven mainly—albeit slowly—by commercial payors or voluntary CMS programs. However, the introduction of CMS’ Comprehensive Care for Joint Replacement (CCJR) initiative has hastened the pace of change. CCJR is a mandatory bundled payment program for hip and knee joint replacement procedures that will apply to hospitals and other health care providers in 75 metropolitan statistical areas (MSAs) across the country. Tentatively set to be implemented on January 1, 2016, this 5-year program sends a clear message that CMS is serious about moving away from traditional fee-for-service reimbursement. Organizations are wondering what service line(s) will be next for bundled payments, and many expect cardiology to be on deck.

CCJR Background

The CCJR program was announced in July 2015. If finalized as outlined in the proposed rule (after a 2-month comment period), all hospitals in the respective MSAs will be required to accept bundled payments for joint replacement procedures.¹ The program uses a retrospective bundled payment structure, meaning that providers will continue to receive fee-for-service reimbursement for Medicare patients. Then, on an annual basis, the total cost of care (both acute and post-acute) provided during the 90-day joint replacement episode is compared to a regional target price. As “episode initiators,” hospitals accept all of the financial risk for the total cost of care for the joint replacement episode and are also required to meet minimum quality standards. Hospitals pay a penalty to CMS if total costs exceed the regional target price but are eligible for a shared savings payment if the total cost is below the target price. Program collaborators (i.e., physicians, therapists, rehabilitation staff, and home health providers) are eligible to share in the financial risks and rewards if shared savings are achieved.

Relevance for Cardiologists

For cardiologists and cardiac service line administrators, proactively preparing for value-based reimbursement programs can yield substantial benefits. If the CCJR program is successful in driving down costs for joint replacements, cardiac procedures are potential targets for bundled payments. Of particular focus within the voluntary Bundled Payments for Care Improvement (BPCI) initiative have been congestive heart failure and coronary artery bypass procedures. Congestive heart failure ranked as the second most common clinical episode chosen by participating providers in BPCI Model 2 (behind joint replacements), with over 34% participating as of Q1 2014.² The complexity and high costs associated with these procedures have drawn increased attention from CMS. And regardless of whether a mandatory bundled payment program is implemented within cardiology, there are clinical benefits associated with redesigning care processes to be more coordinated and cost-effective. Organizations taking a proactive approach to bundled payments are seeing increased profitability and improved quality of care through the care review process.

Ways to Prepare

There are several key steps that cardiology programs can take to prepare for value-based reimbursement.

Analyze the Total Cost of Care - Traditional fee-for-service reimbursement does not incentivize hospitals and physicians to manage care costs in the post-acute setting. Incentives do exist, however, under a bundled payment structure. Hospitals must be proactive in partnering with physicians and post-acute care providers to better understand and control the total cost of care for an episode. By comparing their average acute and post-acute care costs to the costs of other providers in the region, hospitals can make informed decisions about how to manage costs for their patients, should bundled or other value-based payments take hold more broadly. This is particularly relevant for cardiac patients, whose costs for post-acute care can vary widely due the complexity of the procedures or preexisting medical conditions.

Assess Care Management Processes - As organizations pursue more effective care management processes, understanding ways to control costs for cardiac patients, especially chronically ill patients, is vital. Patient navigators can be helpful in efficiently managing patients transitioning across post-acute care settings. Additionally, increasing the role of advanced practice clinicians (APCs) in patient care allows cardiologists to be more efficient with their time. By directing patients with more manageable post-acute care needs to lower-cost alternatives, such as home health, hospitals can be better prepared to reap financial rewards for savings achieved under a bundled payment structure.

Partner with Physicians - Given that physicians are able to share in the financial risks and rewards associated with bundled payments, administrative leaders must look to develop greater alignment with physicians and include them in the process to identify cost-saving opportunities. Savings opportunities can include supply chain, implant, provider staffing, and post-acute costs. Given that cardiology groups have already been active over the years in developing tighter hospital alignment structures, collaboration under a bundled payment structure could prove less challenging relative to other specialties.

Ride the Value Wave

Provider organizations are entering a new world that requires much stronger partnerships across the care continuum. Proactively developing relationships among cardiologists, hospitals, and post-acute care providers will prepare your cardiac service line for anticipated reimbursement changes. Regardless of whether mandatory bundled payments expand to cardiology, reviewing care management processes to increase efficiency and drive cost savings is vital as payors continue shifting toward value-based reimbursement models.

For more information, contact Will at wcrane@ecgmc.com or Katy at kreed@ecgmc.com.

References

1. Excludes hospitals with extremely low historical joint replacement volumes, Critical Access Hospitals, and hospitals already in the Bundled Payments for Care Improvement (BPCI) Model 1 or risk-bearing Model 2 or 4 for joint replacement.
2. Based on statistics from the CMS Bundled Payments for Care Improvement (BPCI) Initiative Models2–4: Year 1 Evaluation & Monitoring Annual Report prepared for CMS by The Lewin Group.

Keywords: CardioSource WorldNews, Centers for Medicare and Medicaid Services, U.S., Fee-for-Service Plans, Health Expenditures, Medicare

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