The CFA Perspective

More Evidence Points to Inevitability of Bundled Payment for Cardiac Procedures[1]

Posted by John Meyer, FACHE

7/11/16 6:52 AM

Bundled Payment for Cardiac ProceduresAs if the writing was not already on the wall, there is further evidence that HHS will inevitably initiate bundled payment for select cardiac procedures.  Many of us have wondered why it has taken them so long to go this route, given the multiple demonstration projects and the more recent Bundled Payment for Care Improvement Program (BPCI) affecting 1,600 participants that launched for joint replacement this last April.  The previous research has shown that bundling prices for select cardiac procedures was do-able, would reduce costs to CMS and would not result in any degradation of access or quality.  One can only conclude that various forces, including political and lobbying efforts, kept this from happening – until recently.  CFA now believes it to be inevitable, and the timeframe for implementation may be approaching more rapidly than expected.

On June 30, a coalition of physicians, health policy experts and interest groups called on HHS to set up more mandatory pilot programs to test out bundled payment models within Medicare.

Released through the liberal-leaning think tank, Center for American Progress, the letter to HHS Secretary Sylvia Burwell encourages the agency to quickly set up further demonstrations similar to its BPCI program before a new president is sworn in next year:  

“Additional mandatory demonstrations would send an important signal to stakeholders—hospitals, physicians, device manufacturers, skilled nursing facilities and home health care agencies—that Medicare plans to aggressively expand bundled payments alongside other payment reforms.” 

BCPI’s Model 1, which covered payments for acute care hospital inpatient services, is scheduled to end this year.  The letter suggests that HHS use the results of that demonstration to launch a new pilot based on procedures such as coronary artery bypass grafting (CABG), stent placement, cardiac catheterization, pacemaker placement, and congestive heart failure:  

“There is a wide variation in Medicare spending for episodes around CABG, suggesting the potential for substantial savings,” the letter said. “According to one study, the difference between hospitals in the highest-cost quintile and hospitals in the lowest-cost quintile was $23,833, or 70.2 percent. Much of this variation can be explained by differences in prices, suggesting that bundled payment can address price in addition to utilization.”

Among the signatories on the letter is former CMS Administrator Don Berwick, MD, Ezekiel J. Emanuel, MD, PhD, chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania, and Alice Chen, MD, executive director of Doctors for America.  While one can speculate that this policy “request” is no more powerful than any other, we are in an election year and healthcare is a significant political issue.  If so empowered, could CMS initiate the next round of bundled payments, specific to cardiac procedures, and implement the process by the end of the federal fiscal year (October, 2016)?  It is possible (and if not on that timeline, more than likely still within the near future).

A recent survey of hospitals conducted by the American Hospital Association concluded that only about 30% of hospitals are making progress in managing the distribution of payment for a bundle to the physicians, hospitals and non-acute facilities that delivered care.[2]  What about the other 70%?  Just how close, or far away, are they from being adequately prepared?

Cardiac procedures represent a significant portion of most hospitals’ bottom lines.  To believe that taking the appropriate action to prepare for bundling will occur without a concerted effort, and in the very near term future, is financially risky.  CFA urges every hospital to prepare for this inevitability, and to make sure that preparations are made without undue delay.  It is no longer a question of “if,” but a question of “when.”

As always, CFA welcomes your comments, suggestions and questions.

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[1] https://www.americanprogress.org/press/release/2016/06/24/140370/release-health-policy-leaders-and-doctors-call-on-hhs-to-test-more-mandatory-bundled-payment-models/

[2] Most Wired:  Leveraging data for bundled payments, orthopedics goes first.  Hospitals & Health Networks, June 2016, page 16.

Topics: Bundled Hospital Payment