Bundled Payments Demo Shares Savings with Doctors and Patients

Baptist Health System's motivation for participating in a CMS pilot on shared or bundled
payments — a reimbursement model increasingly mentioned in healthcare reform debates
was capturing a great percent of market share in its San Antonio and South Texas market,
according to Baptist's Chief Development Officer, Michael Zucker.

While Baptist Health System is a major player in the cardiac arena, having a little over a
third of the cardiac market share, we saw an opportunity, through the CMS Acute Care
Episode (ACE) Demonstration Project, in that other 65 percent of the market that is
undirected and going to other healthcare systems in the area, said Zucker.

Baptist has a little more market share on the orthopedic side, added Zucker, but the
opportunity there was that 59.9 percent of the marketplace could potentially move to
a Baptist Healthcare System facility.

There were several components of the CMS ACE program. First, there was a competitive
bidding process. CMS was focused on one geographic region within the country. They
chose the Southwest, which included Texas, Colorado, Oklahoma and New Mexico.
These four states fall under the fiscal intermediary TrailBlazer, which administers
the Medicare program in this region.

During the competitive bidding process, CMS put out a proposal to providers in the 15
largest metropolitan statistical areas within these four states and sought bids on
package pricing or bundled pricing from both the hospitals and the physicians on the
targeted cardiac and orthopedic DRGs. CMS was going to select one provider system;
that is, the hospitals and physicians who put in the combined bids in each of these
metropolitan areas up to the 15 markets that they’ve identified. They didn’t select
15 markets; in fact, CMS only chose five markets in the country to kick off this program.


Another key component of the ACE Demonstration Project was the concept of shared
savings. CMS was seeking a lower combined pricing structure from what they would
traditionally get under the current Medicare process, which is a DRG basis for the
hospital side and the fee schedule arrangements on the physician’s side — or Part A
and Part B as we know them, said Zucker. In effect, taking that savings and passing
it back on to the Medicare beneficiary is a key differentiator from past demonstration
projects. The actual patient or Medicare beneficiary would be allowed to share in that
cost savings, but also have an incentive to seek out CMS to find this as a value-based
center of excellence.

The bundled payment concept would include both Part A and the Part B components for the
hospital where individuals were having any of 28 cardiac and nine orthopedic DRGs. Note
that this does not include any outpatient procedures; these are only admissions, he added.

Another key focus for the ACE Demonstration Project was the gainsharing with physicians.
And lastly, the beneficiary incentive or the check back to the beneficiary in that shared
savings.

Bundled Payments Demo Shares Savings with Doctors and Patients is excerpted
from Medical Home Reimbursement ABCs: Funding Care Delivery through ACOs,
Bundled Payments and Concrete Contracts
, which profiles three healthcare
organizations (including Baptist Health System) that are redefining healthcare
reimbursement with their pilots of new payment models and contracting strategies.
Order your copy today at:
http://store.hin.com/product.asp?itemid=3952

This guide also profiles Dean Health System, which reengineered its practice as
an accountable care organization (ACO). Dr. Craig Samitt, M.B.A., describes the
recruiting, incentives and performance management strategies built into the ACO
model. Experienced in negotiations with public and private payors, Dr. Barbara
Walters, senior medical director at Dartmouth-Hitchcock Medical Center (DHMC),
describes how DHMC's participation in CMS's Group Physician Practice demo for
Medicare beneficiaries; a partnership with Cigna to create a medical home pilot
whose reimbursement structure starts with quality, not cost; and the separate
New Hampshire Citizens Health Initiative, a multi-site multi-stakeholder medical
home pilot. Dr. Walters brings the industry up to speed on DHMC's negotiating
activities over the last year, describing how to represent providers' interests
through effective negotiations and contracts with payors for the medical home
model of care.


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