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

2. 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

3. 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

4. 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.

5. 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.

6. 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

7. 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

8. 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

9. Questions