You're Probably Not Ready for This Health Care Change

Thursday, May 26, 2016 | Larry Sobal

Last week, the Health Care Payment Learning & Action Network (LAN) released its white paper, Accelerating and Aligning Clinical Episode Payment Models: Cardiac Care. This document signals what could be a monumental shift in the reimbursement and payment policies of both federal and commercial payers in the U.S., outlining thoughts on creating a one-year nested bundle for Coronary Artery Disease (CAD).

Let’s start with an understanding of LAN. The Department of Health and Human Services (HHS) is working in concert with private, public and non-profit sectors to transform the nation’s health system with a goal of tying 30 percent of Medicare fee-for-service payments to quality or value through alternative payment models by 2016—and 50 percent by 2018. HHS has also set a goal of tying 85 percent of all Medicare fee-for-service to quality or value by 2016—and 90 percent by 2018. To support these efforts, HHS launched LAN to help advance the work being done across sectors to increase the adoption of value-based payments and alternative payment models.

Although the LAN CAD white paper is not proposing specific legislation, the document should be viewed as a set of ideas and recommendations that likely paint a picture of where health care payment is heading—and all parties in the U.S. health industry should pay attention to its message.

LAN is one part of a larger effort at the Department of Health and Human Services to drive better care, smarter spending, and healthier people by improving the way care is delivered, the way providers are paid, and the way information is shared to support decision-making. 

Although the LAN CAD white paper is not proposing specific legislation, the document should be viewed as a set of ideas and recommendations that likely paint a picture of where health care payment is heading—and all parties in the U.S. health industry should pay attention to its message.

There have been a variety of bundled payment experiments to this point, most recently the Bundled Payments for Care Improvement (BPCI) initiative and the Comprehensive Care for Joint Replacement (CJR) model. The big news here is that under the CJR model, Medicare is making bundled payments mandatory for hospitals, doctors and other providers—for the first time. It’s safe to say that we are in the infant stages of learning to work in a bundled payment scenario.

Since the LAN white paper proposes a one-year bundle related to CAD, this is a dramatic expansion of the bundling concept, which has epic implications for health care. No, I’m not referring to that EPIC, although this would be a perfect time for EHR vendors to finally get their act together regarding user functionality, interoperability and data extraction.

Why a CAD bundle would be such a game-changer may not be apparent to anyone other than those intimately involved in treating heart disease. As opposed to a procedure-based bundle, such as a joint replacement, where there is a clear focus and attributable physician (the orthopedic surgeon), CAD is a complex diagnosis with a wide variety of settings in which CAD patients receive care, likely with multiple physicians participating in each patient’s treatment course. It’s akin to CMS establishing a bundled payment for arthritis, rather than joint replacement.

It’s not hard to see why CAD was chosen. It’s the most common type of heart disease and the leading cause of death among men and women in the United States, killing more than 370,000 annually. As one would expect from those statistics, CAD consumes a lot of resources and represents a significant portion of the annual $300+ billion spent on treating all forms of heart disease in the United States.

If the LAN’s intent is to start with the largest and possibly most complex opportunity, with the creation of strong financial incentives to reduce medical spending, it probably could not have made a better choice. But this raises many questions. The most obvious is whether the U.S. health care system is ready and capable of tackling such a monster issue (a one-year bundle of a disease versus a shorter time period focused on a procedure), with the vast majority of health organizations and physicians not yet having been exposed to the concept. Furthermore, a bundle of this nature would almost certainly drive a dramatic reduction in unnecessary variation, if not unnecessary care. What isn’t certain is whether the incentives would ultimately cause the withholding of necessary care.

It’s important to note that the LAN is seeking feedback on the white paper, due back by June 20.

Here are some of the many questions that will need to be answered if this turns into a formal CMS program:

1. What exactly will be covered under the bundle?
2. How will those services be reimbursed—prospective or retrospective?
3. How will the episode be priced?
4. Who will be the accountable physician and how will attribution be handled?
5. Who takes the risk for performance in the CAD episode and how is that risk structured?
6. What role do quality metrics play in the CAD bundle and reimbursement?

On a final note, I think it’s important to read this white paper and also have an understanding of the Comprehensive Primary Care Plus program recently announced by CMS. My May 12 blog post offers a summary of CPC+ and MedAxiom offers a variety of educational resources related to Bundled Payments.

The LAN white paper, CPC+ and other initiatives all strongly point to a new environment where primary care, specialty care, hospitals and post-acute care will need to work closely together in ways they may never have before, including the sharing of reimbursement funds. You may not be ready for it, but I can’t think of a better time to start preparing.

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Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

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