Build Your Ark Before the Flood

February 2016

In the Old Testament of the Bible God provides instructions to Noah to build an ark to permit his family and the species of the earth to withstand the great flood. Noah heeded God’s words and constructed the ark in advance of the flood. His family and a pair of each species entered the ark seven days before the rain storm began which flooded the earth. While the Centers for Medicare and Medicaid Services (CMS) should not be elevated to divine stature in this analogy, the reality is that CMS is providing instructions that major changes are eminent for health care payment in the U.S. for Medicare patients.

The signs are clear. First it was the Acute Care Episode (ACE) demonstration, a bundled payment programs in the Southeast that focused on Total Joint Replacement and Coronary Artery Bypass Grafting. Then it was the Bundled Payment for Care Improvement (BPCI) program; a voluntary bundled payment programs in some 48 different groups of MSDRGs among over 400 hospitals. Now it is the Comprehensive Care for Joint Replacement (CJR) program; a mandatory payment program for 65 MSAs across the country. Private insurers are following suit as a number of different bundled payment paradigms are being designed for total joint replacement patients in the private sector. Can one deny that the storm clouds are gathering, and that bundled payments will “flood” the healthcare payment horizon in the near future? The Bundles are coming!

Now is the time to build the ark for the coming Medicare bundled payments of care. Hospitals and physicians must know their outcomes of care for both the inpatient and post-discharge periods of time. Outcomes need to be risk-adjusted and benchmarked to other hospitals and providers. Understanding the risk profile of patients with high probability for adverse outcomes is essential. Prevention of complications becomes important, since inpatient complication rates not only increase the cost of the index admission but are clearly associated with post-discharge Emergency Department visits and readmissions to the hospital. Getting the full 90-day outcome profile after discharge is very difficult but is essential for success in the bundled payment environment (see CJR). For that reason, better tracking systems and effective communication pathways are key to avoiding unnecessary post-discharge costs. Hospitals and physicians must develop gain share programs that will optimize incentives for better care and less cost. In short, building the ark of cost-effective is hard work. But it’s not impossible.

At MPA Healthcare Solutions, we have been working with Medicare data for over a decade. We do risk adjustment across the entire continuum of inpatient and post-discharge care, and profile cases that need special attention. We can define for you comparative statistics on outcomes and costs for your regional area which will likely be the reference payment source for Medicare going forward. We can breakdown where outcomes are good and where care redesign needs to be implemented. Our intelligent bundles models can provide a fair and effective gain share methodology and can bring hospital leadership and its physicians together. It is likely that Medicare will rapidly move forward with expanding Medicare Bundled Payments in the years that are immediately ahead. The good news is that if you take the steps outlined above, you will see improved outcomes, lower costs, and higher patient satisfaction. Preparing now won’t just help you to survive the flood, it will help you to take advantage of it.

Donald Fry

Donald E. Fry, M.D. is Executive Vice President for Clinical Outcomes Management at MPA Healthcare Solutions, Adjunct Professor of Surgery at Northwestern University, and Professor Emeritus of Surgery at the University of New Mexico School of Medicine. At MPA Healthcare Solutions, Dr. Fry provides clinical leadership in analyzing and evaluating clinical performance, guiding quality improvement, and creating incentives for coordinated, cost-effective care.

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