Financial, Clinical Considerations When Bundling Payments

At the Becker's Hospital Review 5th Annual Meeting in Chicago on May 16, Jonathan Pearce, CPA, principal at Woodbury, N.J.-based Singletrack Analytics, and Kelly Price, director at Rensselaer, N.Y.-based DataGen Group, discussed financial and clinical considerations when bundling payments.

Bundled payments are a form of value-based payment, primarily around care episodes, in use by payers and healthcare providers. Before entering into a bundled payment contract, providers need to examine their data, said Mr. Pearce. To drive costs down, providers need to examine an entire episode of care, not just the inpatient hospital costs.

"Data is powerful, and simple data is what people can act on," said Ms. Price. She suggests healthcare organizations look at costs broken down by admitting physician to see what the average costs for diagnosis-related group episodes are and what their readmission rates are. She also suggests looking at post-acute cost trends broken down by where patients first went for care upon discharge from the hospital to determine if there is sufficient cost variation to create opportunities for savings.

When looking at DRG care episode data, it is important to remember risk decreases with population size, said Mr. Pearce. "If you have a DRG episode with a high amount of variation you need more episodes to manage risk. If you have an episode with a low amount of variation, such as a valve procedure, fewer episodes are needed to manage risk," he said. "A small sample size is not your friend if you have high variation," he added.

More Articles on Bundled Payments:

How to Structure Sound Shared Savings Programs: Get Physicians Involved
Bundled Payment Trends: 10 Findings on Arrangements Across the U.S
3 Strategic Advantages of CMS' Bundled Payment Initiative for Post-Acute Care Providers

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