October 29th, 2015

Setting up for Success with Value-Based Payments

Dr. Sylver Quevedo

A massive effort is underway to transform the operations of care and care delivery within healthcare, with the goal of improving quality, reducing costs, and focusing more on the patient. Bundled payments represent an opportunity for both payers and providers to collaborate on increasing efficacy and efficiency: and effective collaboration is key.

Let’s say a payer and provider have agreed to a bundled payment initiative in which back surgery is categorized as a specific Episode of Care (EOC). For this bundle, both parties agree that payment will not be given for any Category 3 Potentially Avoidable Complication (PAC), such as wrong-side surgery, and any savings generated by improved practices will be split between the payer and the provider. That sounds like a great idea…until the surgeon realizes that more patient visits were included in the bundle than he previously believed, and that the follow-up by the physical therapist is impacting his success rating, and no one knows how the overall savings of $10,000 should be divided or when.

For all involved, the transition to a bundled care system will be monumental. However, we have seen successful implementation of bundled care programs over the last decade and significant development in technology have provided a host of new tools to help both payers and providers implement more effective and efficient strategies. One thing that all of the previous models have taught us is that successful programs rest upon completely transparent relationships.

The first step is to make sure the program, the incentive structure, and the evaluation process are clearly defined. Care providers must understand how episode definitions were constructed, how they will be measured and how they can achieve the incentives. Importantly, payers should be very clear on what data will be used to evaluate providers and over what period of time it will be collected. Providers also need to know if they are being evaluated as individuals or as a group. If I am the lead provider, I want to know how the care provided by the nurses, physical therapists, and others will affect my performance evaluation.

In addition to knowing when they are doing well, it is extremely important that providers understand the downside risk. What happens if I don’t meet the incentives? When will I be informed if I am not doing well, and what support services will be available to me either to improve their performance or better coordinate care?

At the same time, providers cannot expect to continue with their same clinical habits and simply have a change in bookkeeping. Bundled payments represent a much more holistic manner of managing healthcare, and physicians must alter their workflow accordingly.

Bundled care initiatives have a lot of potential, and their success depends upon both providers and payers collaborating around the program design from the start. Big data analysis is transforming the way we understand and evaluate healthcare, and transparency helps to form a cohesive team with all parties on the same graph.

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