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Finally, the rubber hits the road for value-based care: Bundled payment for cardiac surgeries

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Anita Joseph, Marketing Manager, Apixio

This summer, another victory was was won for quality-based healthcare payments, moving the healthcare industry toward higher quality, cost-effective care. The Centers for Medicare and Medicaid Services (CMS) expanded its mandatory Bundled Payment Initiative (BPI) to include cardiac care and hip fractures as part of its ongoing effort to restructure the way government reimburses care. Given the unique challenges of treating cardiac patients, this new initiative will test if health systems are ready to handle not just the rhetoric of value-based care, but the actual care delivery demands it will bring.

CMS has been pushing the rhetoric of value-based care for some time. In January 2015, Health and Human Services Secretary Sylvia M. Burwell said that by the end of 2016, 85 percent of Medicare payments would be tied to quality, and the number would increase to 90 percent by 2018. She also said by the end of 2016, 30 percent of Medicare payments would be tied to quality/value via alternative payment models such as ACOs or bundled payment models, and by the end of 2018, 50 percent would. Earlier this year, CMS announced the components of the Medicare-Incentive Based Payment System (MIPS), the new model for physician services component of care payments, would be tied to quality starting in reporting year 2017.

However, the payments that have actually been distributed via value-based incentives have shadowed these promises. A limited amount of distribution has occurred via the value-based payment modifier, the Medicare Shared Savings Program and a couple other ACO demonstration projects, and the mandatory BPI for joint replacement. But large-scale change has not happened. This is apparent in the way physicians report their own compensation: on average, only 6 percent of physician compensation is comprised of value or quality metrics, according to Merritt Hawkins 2016 Review of Physician and Advanced Practitioner Recruiting Incentives. And as long as payment reform lags, care delivery reform will too.

Implementing BPI for cardiac services might change this. Under BPI, CMS pays health systems and physicians a lump sum for Medicare Part A and B items and services for an episode of care (defined as the time of admission for surgery through 90 days post-discharge), as opposed to individually for every procedure a patient has – fee-for-service. The lump sum is pegged to historical cost data on how much treatment for that episode should cost in addition to quality benchmarks.

The idea is that, with shared incentives, physicians have more reason to work together to manage a patient’s care, contain costs, and reduce readmissions and postoperative complications. Currently, costs for treating major illnesses vary vastly around the country, as do outcomes. Leveraging the power of care coordination can improve both costs and outcomes.

This past April, mandatory BPI went into effect in 67 metropolitan areas for hip and knee replacement surgeries, the most common surgeries received by Medicare beneficiaries. This new BPI initiative will be a mandatory 5-year program for hospitals in 98 randomly chosen metropolitan areas, which represents a significant swath of the country. It would encompass three types of care: acute myocardial infarctions (heart attacks), coronary artery bypass grafts, and hip/femur fracture treatments.

While the joint replacement BPI this was a significant move, hip and knee replacement surgeries are often scheduled and elective. Unlike joint replacement, cardiac surgeries happen out of urgent need and are often performed on frailer patients with more chronic conditions. Given the unique challenges of treating cardiac patients, this new initiative will challenge health systems to execute on value-based care delivery. It is especially important to coordinate care for these patients, yet the penalty of not doing so is real. It’s very possible that hospitals will fail to achieve the cost and quality benchmarks – currently, treatment costs for heart attacks can vary by as much as 50 percent.

Yet these high stakes may be just what health systems need to start implementing care delivery reform in earnest. As long as incentives are only slightly altered or only apply to a small and self-selecting portion of the health system, they will never truly affect change. BPI for cardiac care may be the most difficult value-based care initiative that CMS has pushed so far, and that’s a good thing.

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