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Lessons Learned and Opportunities Ahead for Bundled Payment
Presenter Mark Montoney, M.D., M.B.A.
EVP/CMO Vanguard Health Systems
I do not have, and have not had, in the last 12 months, any relevant financial
or other relationship with any proprietary entity producing health care goods or services including the
manufacturer of any commercial product or device I will discuss during my presentation.
Vanguard Today
Spectrum of Payment Models – Shifting Performance Risk to Providers
FFS All Services
Full Cap
De
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f F
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al R
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Degree of Clinical Integration
Po
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d V
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PCPFFS All Services
Full Cap
De
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f F
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Degree of Clinical Integration
CA Delegated Model
Shared Savings
FFS + P4P
Po
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d V
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e Selective Capitation
PCP
Episodic Bundling
• Current Medicare pilot programs focus on episodic payments (bundling pilot) and shared savings (ACO pilot)
ACO Pilot
Bundled Payment Pilot
Bundled Payments 101
IP Acute Stay Surgeon RehabAnesth. ReadmitPrimary
Care
Projected Episode Cost
Actual Episode Cost Savings
Hosp MD MD
Actual Episode Cost
Discharge
Sample “Bundle” Payment
Most episodes can be generalized in this fashion; Differentiation occurs at the point of incentives
• Alignment Strategy
• Improve Quality and Lower Costs
• Move towards Evidence Based Medicine
• Shift Market Share
• Shape Policy / Gain Experience
Rationale for ACE
ACE Components
• Competitive Bidding Process
• 28 Cardiac & 9 Ortho DRGs
• Gain Sharing Opportunity
• Beneficiary Incentive
• Bundled Payment
Bundled Payment per caseBundled Payment per case
ACE Funds Flow
Gain Share ExampleGain Share Example
DRG 470Major Joint Replacement of Lower Extremity w/o
MCCVOLUME 710 Medicare Admissions
PHYSICIAN PAYMENT Part B $1,065,000
DRG 470 – Major Joint Replacement or Reattachment of Lower Extremity w/o MCC
Gain Share Example
• SCIP 1 – Antibiotic Received 1 Hour Prior to Incision
• SCIP 2 – Appropriate Antibiotic Selection
• SCIP 3 – Antibiotic Discontinued 24 Hours After Surgery
• VTE Prophylaxis Ordered
• Smoking Cessation Ordered (for active smokers)
Orthopedic Quality Metrics: Orthopedic Quality Metrics:
Significant Process ImprovementsSignificant Process Improvements
Quality Improvements in Quality Improvements in
Orthopedics Orthopedics
Quality Improvements in Quality Improvements in
Orthopedics Orthopedics
Applied to Bundled Payment
Pilot (BPCI)
• Improvements in quality and evidenced based practice possible with correct alignment and attention to mechanics
• Prepare to distribute gain sharing on a consistent and
routine basis
• Increased transparency & robust information systems an enabler to building healthy partnership – although it is more expensive and time consuming than expected
• Labor intensive to administer program – so we need to be able to identify and measure the largest drivers of quality and cost
• Improved process and management has a halo effect to
other business lines -- it is imperative we capitalize on the opportunity
Collaborate on Bundled Payments
• Bundled payments one
strategy to reducing costs
• Requires improved
coordination, but can
effectively drive margin
improvements
• Medicare bundled
payment strategy
presents an immediate
opportunity
Overview of CMS Bundled
Payments
Vanguard’s BPCI Participation
Phoenix
Model 4
•Effective 7/2013•Cardiology (Arizona Heart)
•Total Joints
San Antonio
Model 4
•In Place (ACE)•Total Joints
Model 2 (30 Day)
•Effective 7/2013•Heart Failure
Valley Baptist
Model 4
•Effective 7/2013•Total Joints•Cervical & Non-Cervical Spinal Fusion
Chicago
Model 2 (90 Day)
•Effective 1/2013*•Multiple Clinical Episodes and Includes
Primary Care Redesign
Detroit
Model 2 (30 Day)
•Effective 1/2013*•Total Joints
*Hold harmless from January 1, 2013 – June 30, 2013
Key Components of Bundled Payments
for Care Improvement (BPCI) Program
Key Components
• 3 year agreement scheduled to start 1/1/13
• Required 2-3% discount to Medicare compared to historical claims
• Detailed bundled payment design, including list of DRGs, inclusion and exclusion criteria, episode trigger and window, and risk adjustment mechanism
• Detailed action plan to redesign care to maximize coordination, patient-centeredness, efficiency, and improved quality
• Detailed physician gain sharing model (up to 50% of professional fees), including criteria for participating, methodology and frequency of sharing gains, and safeguards and quality control mechanisms to ensure that medically necessary care is not reduced
• Detailed set of performance metrics to monitor quality and
Necessary to Continue Progress
Post-ACE
� Reach Beyond Low Hanging Fruit
� Focus on Clinical Outcomes (vs. Process
Measures)
� Further Leverage Pricing Power
� Prepare for Post-Acute Bundling
� Drive Care Redesign and Efficiencies in Clinical
Bundling to Achieve Care Reliability