Success key No. 2: Prospects for bundling
Hillcrest Medical Center has embarked on shared savings with physicians as part of a bundled payment program demonstration project in cardiology, and it has seen reduced costs and improved efficiencies, says Harrison.
The three-year Medicare Acute Care Episode demonstration project for Hillcrest Medical Center began in May 2009. The demonstration was to test the effect of bundling Medicare Part A and Part B payments for acute episodes of care, with the effort designed to improve coordination, quality, and efficiency. Five sites in a four-state area were selected as value-based care centers for designated cardiovascular or orthopedic procedures.
Under the payment methodology, CMS would share 50% of its savings with Medicare beneficiaries, not to exceed their annual Part B premium. The selected set of procedures included 29 cardiac inpatient surgical services.
Hillcrest doctors have been guaranteed regular surgical fees as part of the pilot project, but they can also receive a provider incentive from Hillcrest for keeping costs down and maintaining high-quality scores, such as low infection and readmission rates, says Harrison. Hospital officials have not disclosed payments, but Harrison notes that "participating facilities can arrange provider incentive payment methodology under their program with CMS approval." She emphasizes that physicians would have to meet "the predetermined and agreed-upon savings criteria and quality measures as defined by our agreement." The maximum cannot exceed 25% of their reimbursement for these cases, says Harrison.
Bundled payments are among the models being considered under healthcare reform to replace fee-for-service.
"The most important thing with cardiology is going to be bundled payments, with the ACE demonstrations really pointing the way where CMS will be pushing hospitals," says Anderson.
There have been satisfactory results not only with the scores, but also with physician involvement, linking them to the gainsharing initiatives, Harrison says. There has been "better coordination with our physicians and collaboration on episodes of care," she adds.
Over a 15-month period, scores on several quality measures increased, while supply costs decreased. The hospital saved up to $750,000 in Medicare payments on 37 diagnosis-related groups, according to hospital officials.
Another important area focused on improved product management and cost controls with physician involvement, she adds.
As the program began, hospital officials realized that many surgeons didn't know "the actual cost of the products they used," Harrison says.
The hospital examined "a supply list and standardized the products for quality and reduced costs," she says. "We didn't go to a sole source and didn't dictate [products] from a certain supplier. We left the decisions to the doctors. We were working with physicians from the start, involving them in the decision."
Among the benefits: 11% defibrillator implant savings, 9% stent implant savings, and 25% stent supply savings.
"We're feeling good about the results, and we think we've learned more working with physicians and quality improvements," she says.