Top 4 Organizational Competencies Needed For Success with Cardiac Episode Payment Models

Thursday, May 25, 2017 | Larry Sobal

 

Until now, the health care debate has been about insurance. It soon will turn to costs and delivery for heart programs with last week’s CMS release of the Final Rule for AMI and CABG Episode Payment Models. This ends a series of speculations and delays and officially marks January 1, 2018 as the starting date for the three new payment models that will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation following a heart attack or heart surgery. The announcement also covers updates to the Comprehensive Care for Joint Replacement Model, which began in April 2016. The AMI and CABG bundled payments are expected to involve 1,200 hospitals in 98 chosen Metropolitan Statistical Areas (MSAs).

This announcement has provoked some degree of anxiety for chosen hospitals, despite the fact that bundled payments have been around since 1983 when Medicare shifted from paying hospitals on the basis of reported costs to paying a fixed amount per inpatient stay based on a patient’s diagnosis (aka DRGs). Along the way, there have been other bundled payment pilots and demonstration projects, most notably the voluntary Medicare Bundled Payment for Care Improvement (BPCI) initiative launched in 2013 that at one time involved 1,600 organizations and as of January 1, 2017 included 340 acute care hospitals, 620 skilled nursing facilities, 252 physician group practices, 81 home health agencies and 9 inpatient rehabilitation facilities. But in reality, the CV Episode Payment Models are totally new territory for most organizations.

Based on our interactions in the past few months working with heart programs who are in one of the 98 MSAs, or are determining whether to jump into BPCI or negotiate a bundled arrangement with a commercial payer, there is quite a bit of uncertainty on how to get started and, more importantly, how to be successful. Here is my advice on the key organizational competencies to have in place.

#1 – Effective Governance. In my opinion, success is not possible without strong governance of your heart program. When I refer to governance, I am talking about capability that goes far beyond an organizational chart and a committee or two of physicians and administrators who get together every month. A competency of effective governance needs to include attributes such as a shared vision that has been well vetted with key stakeholders, strong physician/administrative dyad leadership team(s), high levels of alignment and engagement from your cardiologists and heart surgeons (and also primary care, ER and hospitalists), ability to reach meaningful consensus on priorities and opportunities, and the willingness, capacity and resources to execute on strategic decisions that result in measureable improvement. In other words, a CV service line that has total accountability for the heart program and truly drives it forward.

#2 – A culture that drives clinical innovation. Success in any bundled payment model will require the organizational competency to embrace near constant change over time. Managing cost and quality in an integrated fashion demands that organizations engage in multidisciplinary group processes to develop consensus-based, best-practice protocols aimed at eliminating unnecessary variation, standardizing care, identifying/establishing best practices, reducing redundant tests and procedures, establishing clear lines of authority and communication and lowering costs. That is hard enough, but now organizations will need to do this to include the 90-day post-discharge period. Successful organizations will thus have to produce “longitudinal care plans” to incorporate all clinical requirements for the entire covered period. This might include incorporation of home health or skilled nursing facility protocols/guidelines into existing or expanded hospital protocols. If the organization does not have protocols in place for these targeted patients, it will need to develop them, expanding the multidisciplinary team to represent PAC and other providers in the process. Protocol development can be both time-consuming and labor-intensive, but it is a critical part of any bundling endeavor. If clinical innovation does not become part of your daily culture, you will be hard pressed to reach the level of performance to master these reimbursement models. 

Most organizations I see are data rich and information poor.

 

#3 – Transforming data to actionable information. Most organizations I see are data rich and information poor, meaning that there are numerous silos of data, almost at an overwhelming level, but limited competency (and information technology) in synthesizing it into useful actionable information. Identifying patients, defining costs, setting prices, monitoring quality, identifying risks and complications, and managing these elements over time will make or break any bundle effort. These critical components will require timely and comprehensive information. Sophisticated hospital costing systems still lag behind other industries. Hospitals will need to address Medicare’s targeted DRGs or analyze other patient DRGs for specific bundling potential, allowing for clinical and cost variances. They also need to match potential bundles with outcomes and understand the circumstances that lead to variability in cost, length of stay, resource consumption, and discharge to a post-acute care provider (PAC) and other factors to control the means of production. Clinically sophisticated risk stratification models and predictive analytics will need to be applied and ongoing care carefully monitored to prevent unnecessary complications, readmissions, etc.

At a minimum, you will need to effectively collate information around the following:

• Volume of services defined by targeted bundle DRGs. The higher the volumes, the greater the potential model upside or downside risk. Alternatively, especially in markets with high Medicare Advantage participation and low volume of traditional Medicare, you will also need to identify how potentially small your EPM target population might be.
• Utilization of post-acute care providers to 90 days post-discharge, including unplanned hospital readmission and emergency department visit rates.
• Financial performance – charges, reimbursement and costs by DRGs.
• Comparison of hospital pricing with Medicare average/target reimbursement. (Is the hospital higher or lower than your local and regional benchmarks?).
• Comparison of Medicare-specified National Quality Foundation metrics for heart attacks and CABG surgery.
• Ability to successfully track (in real time) all of the linked quality metrics associated with the EPMs. Like most CMS programs these days, your quality performance will determine your reimbursement.

The two charts below illustrate some types of information you might start with. The first is an example of how your hospital stacks up against others in your region. The second is an example of drilling down to specific patient episodes to understand how your patients vary within your heart program. Both are necessary to begin to learn where your improvement opportunities are.

# 4 – Working with external partners. I have not come across many organizations that have the first three competencies fully in place today. Therefore, most must ask themselves where they can obtain these competencies in a short period of time. For all but the most sophisticated organizations that have an existing relationship with a data partner and the internal resources to support the governance, improvement work and perform the data analytics (including interpreting CMS-provided data), you will almost certainly need external expertise and resources to help you. Furthermore, managing episodes will mean that organizations will need to work closely with other health providers who are not part of their system today, such as skilled nursing facilities, home health agencies, hospices, etc. Recognizing what you have (or don’t have) as knowledge, expertise and bandwidth, and the ability to partner with others who can bring it to you, is a key competency to embrace.

There are many other organizational competencies that you will need to eventually master, including Post-Acute Care (PAC) Network Development, integrated and coordinated care transitions, and developing effective physician incentive metrics, but the four mentioned above are what I consider to be the most critical to start with.

Even if your organization was not selected in one of the 98 MSAs, or is not prepared to participate in either a BPCI or a commercial bundled payment strategy, it is no doubt beneficial to prepare for the possibility in the future or to keep pace with what your competitors will likely be doing. Taking the proper steps to prepare now for bundled payment (even in small, incremental changes) will expose many ways to deliver high-quality care more efficiently and effectively at a lower cost overall — a valuable effort to undertake in today’s volume-to-value transition, regardless of the payment methodology currently in use. 

If you would like to learn more about the CMS cardiac EPM program and voluntary Advanced BPCI opportunities, MedAxiom is offering a webinar on Thursday, June 1^st from 1-2 EST. You can register here. You can also access a wide selection of EPM-related information at the EPM section of MedAxiom’s website at https://www.medaxiom.com/epmbundles. And, as always, MedAxiom’s consultants are happy to share their EPM expertise with you.

 

Illustration: Lee Sauer

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Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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