Everything doctors need to know about bundled payments
Many independent primary care physicians already work hard to coordinate care effectively; but, are they ready to further strengthen these efforts and work even more collaboratively with hospitals to improve outcomes? Doing so could bring additional reimbursement and a path to satisfy Medicare reimbursement reform requirements—but at what cost? And can physicians take small steps toward bundled payments before diving in completely?
The decision requires an understanding of bundled payments and the opportunities they present for primary care physicians. This information, in turn, makes it easier to determine whether it makes financial sense to pursue a bundled payment arrangement with CMS in the future.
Bundled payments 101
A bundled payment occurs when a payer provides a single payment to a risk-bearing entity—a hospital, physician group or other provider—for all services related to an episode of care.
The payment may cover inpatient care as well as pertinent outpatient services rendered for a defined period post-discharge. Think of it as an umbrella payment for an entire episode beginning with the acute event (e.g., hospitalization) and ending at a defined point in the patient’s recovery.
CMS uses historical claims data to set a target price for each episode. When the total cost of care for the episode falls below that amount, the risk-bearing entity receives the difference and can share the savings with the providers who helped coordinate care and contain costs during the episode.
These providers, known as gainsharers, usually include independent physicians. When the cost of care exceeds the target amount, the risk-bearing entity alone repays the difference to CMS.
Consider the example of a patient with congestive heart failure who is admitted to a hospital participating in a bundled payment arrangement with CMS. Upon discharge, an internal medicine physician sees the patient for three follow-up visits over a 90-day period.
If the physician is in a gainsharing arrangement with the hospital, he or she could realize an additional $162.20 for this episode when savings are generated. That’s 50% of the fee schedule amount for the CPT codes that are reported.
Gainsharing arrangements reward physicians for doing what they do best, which is keeping patients healthy, says Win Whitcomb, MD, MHM, chief medical officer at Remedy Partners, a firm that assists physicians and hospitals participating in bundled payment programs. “This is what they do every day—prevention and management of chronic illness,” he notes.