September 28 2018

The Mechanics of Episodes of Care

Episodes of Care Series: We talk a lot about how to be successful in bundled payment models on this blog. But in the coming weeks, we’re going back to basics. We’ll be talking about the mechanics of bundled payments, the theories behind them, and the challenges and opportunities they present to organizations engaging in the shift to value.

In the face of rising healthcare costs and increasing discord about how it should be paid for and by whom, bundled payment models have risen in popularity. Simply put, bundled payments share the burden of savings and losses across both providers and payers.

Bundled payments, also known as episodes of care, encourage efficiency and higher quality healthcare by promoting collaboration and communication between practitioners to reduce healthcare waste, avoid service duplication, and reduce complications. As these models have expanded, advancements in healthcare technology have made stewarding care journeys more achievable and streamlined than ever before.

Episodic payment models help cut inefficiencies and redundancies from patient care protocols, like duplicate testing, inadequate post-op care, and gaps in care that lead to costly readmissions. Payments built around episodes of care create better outcomes for the patient, incentivize physicians and the care team, and improve the total quality of care.

Other benefits that make the case for bundled payments:

  • These models reward value – not volume
  • Financial risk for patients/consumers is decreased
  • Increased transparency for consumers though fixed/published costs/prices and outcome data
  • Encourages economies of scale for frequently-used medical supplies

Bundled payments are best suited for procedures with easily defined beginnings and ends like surgeries. Otherwise, the lines begin to blur, as with chronic conditions like congestive heart failure which has no distinct start and finish and often occurs alongside other comorbidities that require dedicated care journeys. Innovative organizations are experimenting with bundles designed for chronic illness, but this is still very new to the industry in general.

Skeptics argue that episodic care models may potentially limit patient access to specialty consultants in the name of savings and maintaining a single journey.

There’s also concern over providers gaming the system for larger payments through “upcoding” or delayed coding of treatment provided.

Cardiovascular and orthopedic procedures are well suited for episodes of care as these conditions tend to be the most common, most expensive, and present an opportunity to inform the national healthcare discussion. These episodes of care—like stroke, pacemaker implant, congestive heart failure, acute myocardial infarction, and hip and knee replacements— are among the 48 best suited to this model. These are some of the most common procedures affecting the Medicare population today. Because these episodes touch several providers across many specialties, they are good candidates for greater alignment across providers, improved care coordination, and substantial cost savings.

In theory, these treatment plans, supplies, and pre- and post-op procedures should be routine with little deviation between practices or providers, making it reasonable to roll an entire care journey and its costs into a single track and price.

While many providers see the value of bundled payments and episodic care, in theory, success relies on technology that meets physicians and the care team where they are. This must include providing real-time access to necessary data, insights, case-mix adjustments, patient engagement, and a process that isn’t disruptive to the core task of patient care. Without these critical pieces, managing episodes of care, like those for the CJR model, aren’t nearly as simple as they seem on the surface.

Look out for our next post of this series where we’ll be discussing CMS’s CJR (Comprehensive Care for Joint Replacement) program.

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