Bundled Payments: An Initiative of Payment Reform Providence Hospital BlueCross BlueShield of South Carolina October 9, 2012

Current Trends for Payment Reform Fee-For-Value Moving away from rewarding for activity and toward paying for outcomes Collaboration Greater alignment between payers, providers, employers and patients to improve quality, efficiency and outcomes. Business Intelligence Utilizing data to reduce the enormous variability in care – not just reducing cost

The Institute for Healthcare Improvement’s TripleAim Patient Experience Population Health Per Capita Cost A framework developed by The IHI that describes an approach to optimizing health system performance. Improving the patient experience of care (including quality and satisfaction) Improving the health of the populations Reducing the per capita cost of health care

Current Payment Innovations Quality Based Incentive Programs Rewards providers for achieving improvements in process, efficiency, outcomes, infrastructure and patient safety Patient Centered Medical Homes Primary care physician coordinates a team that takes collective responsibility for patient care and, when appropriate, arranges for care with other qualified physicians Accountable Care Models Coordinated care that meets performance benchmarks for member populations Bundled Payments Pays providers with a single negotiated payment for all clinically related services of the specific episode delivered by various providers over a period of time.

Bundled Payments Utilize the PROMETHEUS Payment® (www.hci3.org) Designed by American College of Physicians, the Leapfrog Group, the National Business Group on Health, the BlueCross and BlueShield Association and CMS Claims are analyzed to determine a patient's conditions and risk factors.  Two types of claims: typical claims and claims associated with Potentially Avoidable Complications (PACs). As PACs are reduced or eliminated, the leftover allowance is distributed amongst all providers for the patient as a bonus.

Operational Model Retrospective Model Patients are identified through current authorization process and a custom budget is created Severity-risk adjusted Claims are paid based on existing reimbursement methodology as services occur (FS, DRG, etc.) After claims are paid during the pre-established time frame, compare actual dollars paid to predetermined budgeted amount. Quality measures are incorporated

Benefits to Bundled Payments Opportunity to strengthen hospital-physician alignment “Spillover” effects Changing practice patterns for bundled payment contracts and extending these practices and producing similar results—lower costs and better quality—for other patients Allow hospitals and physicians to capture the value created by process improvement efforts Enhanced revenues through strategic marketing efforts

Progress Towards Bundled Payments Providence and BlueCross started discussions in March 2011 Determined how patients were identified Determined quality indicators and claim operations Planning first bundled payment arrangement in South Carolina

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