Denver, CO (PRWEB) April 25, 2013
On January 31, 2013, the Centers for Medicare & Medicaid Services (CMS) announced 467 health care organizations have elected to participate in the Bundled Payments for Care Improvement (“BPCI”) initiative, an innovative alternative payment model. Under BPCI, providers (or conveners of providers) will enter into one of four different bundled payment models that include financial and performance accountability for episodes of care. It is envisioned that these models will lead to higher quality through increased coordination of care between hospitals and physicians while providing a lower cost per episode to Medicare. Subject to CMS approval, hospitals and physicians may implement “gainsharing” programs that enable sharing of cost savings so long as quality and patient experience parameters are met. CMS has indicated an implementation date of July 1, 2013 for most aspects of BPCI with the potential to expand the program in coming months.
Similar to Medicare, the private payer/commercial market is also seeking innovative benefit designs that reduce cost and increase quality. Included amongst these initiatives are “narrow networks” that actively direct patients, using significant financial incentives, to high-quality, value-oriented providers. TRG sees that, in many cases, these “networks” will utilize bundled payments as a means of reducing costs and aligning providers. Successful implementation of these models will hinge upon the ability to construct high-quality provider networks capable of offering bundled payments locally or regionally, thereby enabling patients to benefit from coordinated care across multiple settings.
In January, the OIG posted Advisory Opinion 12-22 related to a cardiology co-management agreement between a hospital and group of physicians. The co-management model reviewed by the agency includes a guaranteed fixed fee as well as a potential performance-based incentive for the cardiology group in an amount equal to the fixed fee. The bulk (60%) of the performance fee can be earned by the physicians if per-case cardiac catheterization lab costs are reduced. An additional component of the performance-based fee is achieving designation as one of “Thomson Reuters Top 50 Cardiovascular Hospitals”. In its Opinion, the OIG outlined several key components of the management agreement that were sufficiently protective such that the agency would not pursue sanctions related to laws including civil monetary penalties and the Anti-Kickback Statute. Key facts of this proposed arrangement include:
- Cap on fixed payments for services and related bonus;
- Tiered bonus structure not based on patient volume;
- Inclusion of satisfaction and patient quality measures balanced with payments tied to cost efficiencies;
- Use of outside parties for benchmarking and annual audit;
- Strong governance and reporting provisions within the hospital;
- Patient disclosure of agreement; and
- Compensation based on fair market value.
Jim Reilly, Managing Partner of TRG Health Care Solutions sees the OIG’s response as being favorable regarding the future of hospital-physician alignments. “This Opinion opens the door for inclusion of payments to physicians related to cost reduction efforts framed within the proper management structure,” said Reilly. “Given the challenging reimbursement landscape for hospitals with payments shifting to risk-based care and based on outcomes, the OIG’s favorable reply should assist hospitals and physicians in structuring effective alignment arrangements that do not violate existing statutes.”
TRG Health Care Solutions is a national consulting firm with a unique blend of capabilities to serve the needs of both physicians and hospitals on evaluating and implementing hospital/physician alignment models. For more than 20 years, the principals at TRG have been helping organizations across the country identify, develop, and bring to fruition a wide variety of strategic, financial, transactional, and physician alignment opportunities.
Specialized services include:
1. Strategic re-positioning in the post-reform healthcare market;
2. Development of multiple hospital and physician alignment models;
3. Data analysis and bundling on medical claims for high cost inpatient claims; cardiovascular; orthopedics, oncology, general surgery, spine, neurosciences and others;
4. Integration facilitation for physician groups and health care systems;
5. Narrow network development;
6. CMS demonstration/pilot applications; and
7. Co-management governance and infrastructure that enable aligned incentives.