The Users' Guide to the Health Reform Galaxy

Health Reformer's Lexicon: Bundled Payments

The Health Reformer's Lexicon is a weekly feature that will examine key words, terms and phrases in health reform and explore their meaning and orbit.

The term: Bundled payments

The RAND Corporation defines bundled payments—also known as “episode-base payments”—as “a single payment for all services related to a specific treatment or condition … possibly spanning multiple providers in multiple settings. Providers would assume financial risk for the cost of services for a particular treatment or condition as well as costs associated with preventable complications.”

The Robert Wood Johnson Foundation and George Washington University’s Health Reform GPS project adds: “In contrast to fee-for-service payments, which can encourage a high volume of treatment, ‘bundling’ is thought to encourage more cost-effective care.”

(Bundling payments first requires categorizing different types of medical cases. These categories are known as diagnosis-related groups, or DRGs, which Medicare uses to bundle reimbursements to hospitals for inpatient care.)

Why it matters: A root cause of many of the U.S. health care system’s most profound problems—including soaring costs and uneven quality—is the fee-for-service payment system, which encourages overuse of health care services and fails to reward value. Among the alternative options, bundled payment schemes are attractive because they give hospitals and physicians incentives to coordinate care and to provide it more efficiently. Tied to evidence-based medical practice, bundling also promises to increase the value of our health care system—producing better outcomes for patients—in a fair and equitable way.

Roots: Physicians at the Texas Heart Institute introduced bundled payments in 1984 for cardiovascular surgical procedures. A 1987 study found that the Health Care Finance Administration could decrease its costs by more than $192 million (13 percent) under Texas’ payment plan. Since then, as U.S. health care expenditures have ballooned, health reformers have continued to advance the idea of bundling as a way to reform the fee-for-service payment system. The Balanced Budget Act of 1997 established new payment systems for most types of post–acute care services; independent initiatives such as PROMETHEUS Payment have worked on the practical design and implementation of evidence-informed case rates; and President Obama championed bundling in the recent health care reform debate.

Where the term appears: The final health reform bill calls for the creation of a national Medicare pilot program by the beginning of 2013, which will develop and evaluate bundled payment systems for acute inpatient hospital services, physician services, outpatient hospital services and post–acute care services for episodes of care that begin three days prior to hospitalizations and last an additional 30 days following discharge.
 
Under the new law, the government must also set up Medicaid pilot projects by 2012 that will use bundled payments to pay for episodes of care that include hospitalizations.

The Centers for Medicare & Medicaid Services is already experimenting with bundled payments through its Acute Care Episode demonstration, with sites in Texas, Oklahoma, Colorado and New Mexico.

And recently, several major health care providers in California announced plans to use bundled payments to pay for hip and knee replacements beginning in August. The lump-sum fee will cover a full range of medical treatments from surgery to 90 days of recovery.
 
Previous Lexicon entries include:
- Flexible Spending Accounts
- Value-Based Purchasing
- High-Risk Pools

Health Reformer's Lexicon: Accountable Care Organization

The Health Reformer’s Lexicon is supposed to be a weekly feature that will examine key words, terms and phrases in health reform and explore their meaning and orbit.  But what can I say?  Snowstorms, and other developments, all can get in the way. 

The term: Accountable care organization (ACOs)

In a recent policy brief that examines the ACO concept, Urban Institute researchers Robert Berenson, M.D., and Kelly Devers, Ph.D., provide the following definition:

 A local health care organization and a related set of providers (at a minimum, primary care physicians, specialists, and hospitals) that can be held accountable for the cost and quality of care delivered to a defined population.

Why it matters: As Berenson and Devers note,
 
Proposing a new entity with the word “accountable” in its title begs the question of who is becoming more responsible for what, when it comes to delivering high-quality and efficient health care.

Policy makers are looking at ACOs as they search for ways to deliver well-coordinated care that produces positive outcomes while also slowing the rise in health care costs.

Roots: The term ACOs emerged publicly in a 2006 Health Affairs article where a footnote traces its etymology as follows:

The idea of using the term ‘accountable care organizations’ … grew out of an exchange between Elliott Fisher and Glenn Hackbarth at a Medicare Payment Advisory Commission meeting in November 2006.” (Fisher leads the Dartmouth Atlas Project, Hackbarth is the chair of MedPAC.)

Usage: The more fully refined ACO concept appeared nearly three years later, and a similar concept –“accountable care systems”– was explored in JAMA. 

But the references that may matter most at this point are the ones found in health reform legislation.

The Senate Finance Committee’s bill would:

Allow providers organized as accountable care organizations that voluntarily meet quality thresholds to share in the cost-savings they achieve for the Medicare program. To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have adequate participation of primary care physicians and specialists, define processes to promote evidence-based medicine, report on quality and costs measure, and coordinate care.

 

'Cost of Dying' on 60 Minutes looks at human and financial toll of system

It's worth taking a look at “The Cost of Dying,” which aired Nov. 22 on CBS News’ 60 Minutes and explores the extraordinary amount of money spent on medical care at the very end of people’s lives.

In 2008, Medicare paid $50 billion for doctor and hospital bills during the last two months of patients' lives – with as much as 20 to 30 percent deemed to have had no meaningful impact, Steve Kroft reported.

Dr. Elliot Fisher of Dartmouth Institute for Health Policy and Clinical Practice noted that as many as one-fifth of Americans end up dying costly deaths in intensive-care units because "it's the path of least resistance" - the easiest way for doctors to manage them.

But the report is at its most powerful tackling the human costs of such a system.

Families cannot imagine there could be anything worse than their loved one dying," said Dr. Ira Byock, who heads the palliative care program at Dartmouth-Hitchcock Medical Center (DHMC) in Lebanon, NH. "But in fact, there are things worse. Most generally, it's having someone you love die badly-dying, suffering, dying connected to machines."

Are accountable care organizations the answer to our problems?

Kelly Devers and Bob Berenson of the Urban Institute write about the latest policy brief by Urban and RWJF, which focuses on the concept of creating more accountable entities in health care.
 
In the often contentious health reform discussions, ideas that are good in theory often gain quick currency, but deserve closer examination as to whether they might actually work.  One such idea is the accountable care organization (ACOs).  Accountable care organization are entities—and we’ll clarify what we mean by “entities” in a second—that are intended to address one of the conundrums of our current health care system:  how to pay providers for high-quality, efficient care.  Under our current fee-for-service payment system, we end up paying for volume, not quality or value, that is better quality for the money we spend. In addition, many of the ways we deliver health care, especially for common chronic conditions like diabetes or heart disease, have become increasingly fragmented and cumbersome for both the provider and the patient.
 
To address these interrelated problems of provider payment and delivery, many health care leaders and experts have become increasingly interested in ACOs as a way to bend the cost curve, i.e., deliver higher-quality care to more people without contributing to our escalating health care tab.  ACOs are commonly understood to be local entities comprised of clinicians—primary care and specialty physicians, hospitals—that are responsible for delivering quality care and controlling health care costs in ways that current providers are not. 
 
However, the concept of what ACOs are and how they might work is still murky.  Therefore, in a new policy paper out today from the Urban Institute and the Robert Wood Johnson Foundation, we try to go to uncharted territory, and wrestle the ACO concept into the real world. 

What Congress Can Do To Boost Health Care Quality

Margaret E. O’Kane, president of the National Committee for Quality Assurance (NCQA), an independent, non-profit organization whose mission is to improve the quality of health care, writes about NCQA’s new report, The State of Health Care Quality 2009. You can also read an interview with O’Kane here.

Just as the health care reform process is speeding up, NCQA has found that progress on important measures of health care quality has slowed down. After 12 years of steady and often remarkable progress in performance, the report we released today documented relatively little improvement in most areas of care during the past year by the nation’s health plans. These findings underscore why provisions to improve quality must be part of any health reform package.

Because reform will most certainly bring more individuals into Medicare and Medicaid programs, it was especially disconcerting to see that for the third year in a row, we found that performance of health plans serving these public programs failed to improve on key quality measures. In fact, Medicare Advantage plans made statistically significant improvements on only five of 36 measures (14 percent). The results for Medicaid plans were somewhat better, but still there was a statistically significant gain on only 18 of 50 measures (36 percent), and most of these were small. Results in the commercial plan sector were slightly better, with improvement on 22 of 51 measures (43 percent).

Regulations and health care reform: the devil's in the details

Peter V. Lee, co-chairman of the Consumer Purchaser Disclosure Project (CPDP) and executive director for national policy of the Pacific Business Group on Health, writes about how current efforts to regulate physician reimbursement for Medicare shed light on the importance of the regulatory process that would follow any health reform legislation.

Organizations interested in promoting better, more affordable and accessible health care are not only weighing on the national reform debate – last week, many of these organizations weighed in as a group on regulatory proposals to change how the Centers for Medicare and Medicaid Services (CMS) reimburses doctors.  

“Many of the proposed changes represent steps in the right direction,” the group said in a letter to acting centers Administrator Charlene Frizzera, “but they are incremental and marginal improvements where bold changes are required.”

Civil health reform discussions, still happening in Maine

  Lisa Letourneau, the executive director of Quality Counts for ME, and Ted Rooney, project director of Maine’s Aligning Forces for Quality project write about a forum held last week to discuss health reform efforts in Maine.

In Maine, we know quality—from our famous hunting boots to our favorite shellfish, we produce good stuff.  That commitment applies to how we feel about health care, too.  Last week, we gathered more than 150 Mainers at a forum in Lewiston to talk about what we, in this state, are doing to improve care.  Our event was part of a series of gatherings that have been taking place all over the country, in communities working under RWJF’s Aligning Forces for Quality initiative.  At these events, we talk about what we’re doing to improve our health care, in the places where we live and work, but we also talk about how our work dovetails with the national discussions on health care reform. 

The opposite of that bridge to nowhere

Mike Painter writes about how payment and measurement changes can make care better, ultimately, for patients.

An elderly family member recently received a devastating cancer diagnosis.  She gets her care in California from a team of health professionals in a large integrated delivery system.  We’re supposed to be reassured that her care team is working together in seamless accountability—dedicated solely to the best possible outcomes for her, right?  Unfortunately, that’s not entirely the case.  She, of course, has a primary physician and a surgeon.  She had a hospitalist who managed her inpatient post-operative complications.  She has a number of oncologists. 

Guess what?  None of these five or six physicians were communicating with each other about her care until family members prompted them to do so.  She didn’t really have much, if any, choice in selecting her specialists.  She had minimal, if any, information about the performance of the various professionals she suddenly needed. 

Our "Aha" moment: what Maine learned from PROMETHEUS

Elizabeth Mitchell is CEO of the Maine Health Management Coalition in Portland, ME and writes today about new ways to think about paying for health care.

As Congress looks to add exact greater value for the $2.3 trillion spend the U.S. now spends annually on health care, it should keep a simple maxim in mind: You get what you pay for.

A 2006 article in The New York Times gave a vivid illustration of the perverse effects our current payment system can create. The article noted: “Insurers, for example, will often refuse to pay $150 for a diabetic to see a podiatrist, who can help prevent foot ailments associated with the disease. Nearly all of them, though, cover amputations, which typically cost more than $30,000. Patients have trouble securing a reimbursement for a $75 visit to the nutritionist who counsels them on controlling their diabetes. Insurers do not balk, however, at paying $315 for a single session of dialysis, which treats one of the disease's serious complications.”

Say we get some sausage--then what?

By Mike Painter

sausage (sô´sǐj) n. A highly seasoned minced meat usually stuffed in casings of prepared animal intestine.

Congress is obviously in the thick of the sausage-making. The August recess is pending. Bills may or may not be moving. The legislative process, especially at this point, is not particularly pretty or, to be honest, as thoughtful as we all might hope. It is the process, though, right? There was essentially no way around something like this intestine stuffing, especially in an effort to fix health care—such a large sector of the American economy. And in spite of the messy work and depending on the day, the observer and the poll, it nevertheless seems likely that something will come out of the kitchen, right?

It is also probably safe to say, though, that any reform law is not going to be the panacea—the ultimate health and health care fix. Instead, if a law indeed passes, it’s clear that we’re going to spend the next five, 10, 15 years adjusting, backtracking, redesigning and working toward better care. In other words, the implementation is going to matter, and it’s going to matter a lot.

On July 30 in Washington, D.C. at the Hart Senate Office Building, the RWJF-funded High-Value Health Care Project led by Mark McClellan of the Engelberg Center at Brookings hosted a panel discussion focused on just that—the implementation. Specifically, Mark, Carolyn Clancy of AHRQ, John Tooker of the American College of Physicians, Steve Findlay of the Consumers Union and Jim Chase of Minnesota Community Measurement talked to a large Capitol Hill audience about what it will take to make health care deliver sustainable high value.