Within the past year, major developments have occurred that will have a significant impact on the future of medicine. The Patient Protection and Affordable Care Act (ACA) was signed into law by Congress in March 2010. On March 31, 2011, the Centers for Medicare and Medicaid Services released the proposed rules and guidance regarding the development and implementation of accountable care organizations (ACOs). Almost a month later, on April 23, the CMS announced the Bundled Payments for Care Improvement Initiative (BPCII) as a reimbursement model in which the fees of multiple providers are bundled into a single, comprehensive payment that covers all of the services involved in the patient's care.
The BPCII payment system appears to be somewhere between fee-for-service and capitation. The fee-for-service approach puts the full insurance risk on the payer. There is much criticism that fee-for-service ties reimbursement directly to the volume of services provided instead of quality, and is the root cause for poor coordination of care and overuse of expensive, and sometimes unnecessary, services. Capitation provides a lump sum for the medical care of each individual which transfers the full insurance risk to the provider. Bundled payments focus on a single payment for a defined group of services rather than paying separately for each item or service. A bundled payment system will also require providers to bear more of the financial responsibility for outcomes.
This kind of bundled payment model will need to have some type of integrated delivery system consisting of an administrative structure to determine the continuing medical needs of patients and how much each participating provider should be reimbursed for care. ACOs are being considered as one appropriate entity to manage bundled payments on behalf of providers and to develop collaborative and contractual relationships with facilities such as hospitals in providing patient care coordination.
The ACO/Medicare Shared Savings Proposed Rule, which outlined the statutory framework of ACOs, is rather limiting and allows a narrow scope of providers who can apply, but the BPCII is more flexible and allows applications from not only physicians and hospitals but also from other health care providers, including rehabilitation facilities, home health agencies, and skilled nursing facilities.
In the three retrospective models for episodes of careo applicants would set a target payment amount for a defined episode of care. That price would be negotiated at a discount of 2%-3% off the original Medicare fee-for-service rate. Total payment would then be reconciled against the predetermined target price. For models involving inpatient stay and posthospital care, any profit or shared savings beyond the target price would be paid to the participants. This would be synergistic with the ACO concept of better outcomes for less cost. Costs above targets would be paid back to the CMS.
Presumably, by introducing different options of involvement, it should be easier for providers of different sizes and readiness to participate in the BPCII initiative.
There are numerous concerns as well as multiple potential operational and design issues which must be addressed before bundled payments are universally implemented. Examples of questions neurologists may have include:
▸ Are neurologists willing to have a hospital be in charge of administering their reimbursements and developing an equitable agreed-upon fee for both the hospital and physician group?
▸ How will bundled payments be divided among various physicians including procedural and nonprocedural specialists? Who will make that decision?
▸ Will neurologists be willing to make an expensive investment in a new contracting and claims infrastructure to handle the new payment model, and which disease entities and services should be included in a bundled payment?
▸ Will bundling with hospitals require an integrated health care system with hospital-based neurohospitalists?
▸ In the absence of integration and existing contractual relationships, would a general neurology practice be expected to provide neurohospitalist services?
Neurologists would be well advised to exercise due diligence before entering into an agreement such as an ACO or bundled payment contract without appropriate professional and legal counsel.