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By now, most of our residents have heard chatter regarding future changes to Medicare and specifically, implementation of a Bundled Payment. Currently the Center for Medicare and Medicaid Services (CMS) makes separate payments to providers for each of the individual services they furnish to beneficiaries for a single illness or course of treatment. Inclusive are doctors, specialists, technicians, therapists, etc.. Over time, and with the introduction of the Affordable Care Act, this approach has been targeted by the government as being fragmented, as well as, lacking coordination and evidenced based medicine.

Essentially payments are made to providers based on documented quantity of services but not necessarily quality outcomes. According to CMS, implementing a bundled payment for services rendered should better align all providers involved in a patient’s care and also create an incentive for achieving the very best quality of care. In theory, all Medicare participants should benefit from such changes, but how about the downside? First, we’d be naive to think this program is not designed to reduce government spending specifically targeting the Medicare program. To effectively reduce real costs, the patient has to be discharged from costly care settings, including hospitals, long-term acute care and post-acute rehabilitation settings. Albeit, we all benefit from spending reductions in some fashion but will the patient really gain better outcomes? That remains to be seen.

Under the bundled system there are four models in which to participate. For Renaissance at The Terraces, only Models 2 and 3 are applicable. These models anticipate a rehabilitation setting like Renaissance to partner with local and area hospitals for the “total” care of a patient’s procedure and subsequent recovery. In Model 2, the medical event includes the inpatient stay in an acute care hospital plus the post-acute care and all related services for a defined period of time after hospital discharge. In Model 3, the episode of care is activated by a hospital stay but begins at initiation of rehabilitation services at a skilled nursing facility like Renaissance, inpatient rehabilitation facility, long-term care hospital or home health agency.

Under these retrospective payment models, Medicare continues to make fee-for-service payments; the total expenditures for the episode is later reconciled against a bundled payment amount (the target price) determined by CMS. A payment or recoupment amount is then made by Medicare reflecting the aggregate expenditures compared to the target price. Bundled payment will start with joint replacement procedures and is expected to be followed by cardiology interventions. Why joint replacement? Because of the high number of hip and knee fractures associated with aging and the extensive therapy treatment protocols following hospitalization. Since hospitals are at the epicenter for patient care, they become the nucleus for bundled payment. Accordingly, post-acute care providers must partner with and gain the confidence of hospitals in order to remain viable treatment facilities for Medicare patients.

Make no mistake, bundled payment will drive competitiveness and punitive actions. For example, monetary deductions apply for re-hospitalization. The theory here is that return visits can (not always) be an indicator of substandard oversight and care. If hospitals lose reimbursement due to another provider’s shortfalls, their relationship will most assuredly erode and come to an end. Bundled payment is being tested right now throughout various regions of the country. Based on testing results and anticipated modifications, the program is expected to be fully mandated by 2018. I urge all current and soon-to-be Medicare participants to stay abreast of this program as it continues to evolve.

Be Well,
Ross Dickmann