The healthcare industry has faced numerous challenges in finding effective ways to achieve the triple aim through improving the patient experience, improving health of communities and reducing healthcare costs, and implementing innovative payment strategies is essential in achieving those goals. As expanded bundle payment initiatives are being designed and implemented, it’s important to understand what health systems and payers can do to administer these payment strategies effectively.

Value-based payment models currently in place require costly work-arounds to participate.

Commercial and government payers often struggle with implementing a prospective payment strategy because of standardized claims processing systems. Payers find it difficult and expensive to establish new workflows required to administer a prospective bundle payment program. As a result, payers prefer to engage in retrospective payment models.

Healthcare provider organizations are challenged to effectively manage the patient care in a retrospective payment model. Retrospective payment models are often based on clinical coding of the patient’s episode of care.  Diagnosis Related Group (DRG) is calculated at discharge, which is based on documentation at the end of the episode or event.

In bundled payment models, the multidisciplinary care team must identify patients included in the bundle at the time of service. Patients simply do not show up in an emergency room with a DRG on their forehead. Therefore, retrospective models put healthcare providers in a difficult situation to implement successful interventions designed to manage patient care in real time.

What should organizations do to be successful?

The first step providers need to take is establishing strong multidisciplinary leadership teams engaged in implementing and managing bundle programs. Organizations need to focus on key analytics that drive the cost of patient care. Targeting the patient experience to provide timely clinical interventions that improve clinical outcomes and reduce waste is essential for success. Continuous process improvement strategies are effective tools to manage value-based care bundles.

High performing organizations have established additional systems and clinical workflows to improve financial performance outcomes in value-based initiatives.

These additional strategies are used by health systems to successfully administer bundled payment plans:

  • Acquired additional systems and implemented innovative workflows
  • Engaged multidisciplinary teams
  • Implemented real-time effective care management strategies
  • Fostered effective communication strategies
  • Established standardized care plans
  • Created actionable real-time reporting tools
  • Established effective relationships with the continuum care providers in the community
  • Built solid relationships with payers and engaged in innovative contract negotiations

Payer organizations need to use key analytics to clearly identify the issue that drive care costs in the communities they serve. Once opportunities to improve population health have been identified, the next step is to implement value-based payment strategies based on those findings and coordinate with healthcare providers proactively. Payers must utilize systems and implement continuous improvement strategies to update payer systems or identify practical administrative work-arounds to manage value-based care bundle payment distributions effectively.

Key questions for both health organizations and payers.

As value-based care strategies and bundled payments continue to evolve, organizations and payers must work together proactively to meet the challenge. Here are key questions to ask as you explore how to navigate the healthcare landscape as value-based care initiatives continue to grow.

  • How is your organization currently performing financially in the bundle payment programs?
  • Have you evaluated your system’s capacity to meet the challenges of value-based health care payment strategies?
  • Do you have key analytic reporting tools for engaging in patient episodes of care in “real-time”? What information are you collecting, and can you use it effectively?
  • What care management strategies and tools do you currently have in place?
  • What contract management tools do you have in place?
  • Have you addressed your organization’s ability to manage the bundle payment distribution?
  • Is your team ready to administer your organization’s bundle payment strategies?

About the Contributor

Marybeth Albritton, MHA, Manager

Marybeth Albritton has 22 years of extensive finance experience managing service lines for all provider types with experience on the payer side, as well. Marybeth served as Director of Finance for INOVA Health System for 8 years. As director of Finance she was responsible for providing the financial analytical support to INOVA’s bundled payment programs. As a consulting manager with McBee, she assists clients in analyzing their bundled payment program. McBee developed and provides software that supports hospital clients in managing their bundled payment administrative functions and financial analysis.

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