Preparing for Changes with Obamacare and Bundled Payments

Health care costs have been steadily climbing and budgets in medical institutions across the nation are getting tighter. An aging population means that pre-emptive solutions need to be found to make the national health care system more sustainable and cost effective for hospitals, manufacturers, and patients. Bundled payments, part of the Obamacare plan, have garnered attention as a viable solution to these ballooning costs. There are pros and cons to the changes, and the nearing deadline has sparked much discussion about whether the reconfiguration would do more harm than good.

The imminent changes and varied perspectives associated with bundled payments make it clear that health care service providers and institutions that are more agile and adaptive will fare better going forward. Regardless of policy changes or opinions, positioning your organization to minimize costs and leverage current technology is crucial to secure a future in the costly and dynamic healthcare industry.

While early test programs have offered promising results from the new billing structure, many are questioning the value of these practices and wonder how they will be implemented across a disjointed system. Administration changes and uncertainty surrounding how these transitions will be greenlighted or stopped altogether in the coming months have also led to concern.


Motivators: Why Make the Switch?

The switch to bundled payments is not a new concept. The initiative has been revived for its potential to increase savings during a time of strict budgets and greater quality of care, especially in areas such as cardiovascular care. The current fee-for-service model that has been in effect for a long time works with patients paying separately for each health care provider and distinct service in their treatment plan. Multiple claims must be filed and many argue that the separate payments contribute to a disconnection between health care providers.

In a bundled payment system, medical treatments are paid for as a single end-to-end service. Regardless of the number of locations or health care practitioners who provide services, a single payment is made that covers the entire episode from treatment to recovery. The Centers for Medicare and Medicaid Services (CMS) calculate the costs. If the actual cost comes in under this estimate, hospitals keep the savings. If the price comes in higher than the estimate, the hospital must pay the difference to CMS.

Those who champion the bundled payment option point to improved communication, coordination, and efficiencies across health care providers in disparate locations who offer specialized and often complementary services. The program is expected to encourage more strategic spending and care planning which will result in lower costs across the board and improved quality of care.

Employers and companies that offer or provide benefits packages also typically prefer the bundled payment system, as it creates a more streamlined process for claims filing and fulfilment. The system cuts down dramatically on administration time and creates more predictable, complete costs for coverage.


Early Adopters: Promising Results

Pilot programs have been launched over the past few years to see how the system functions in different settings for patients, organizations, and medical professionals. Among the first test programs was the comprehensive joint replacement program that began in April 2016. The program was rolled out in 800 hospitals in 67 cities across the country and focused on joint replacement procedures. The bundled payment model was put in place for the joint replacement surgery and 90 days of aftercare. Increased diligence, care considerations, savings, and data insights were discovered.

The results were promising and many hospitals seemed to adapt well to the change. In a similar study run by the University of Pennsylvania, it was found that hospitals experienced an average savings of $5,577 on each joint replacement procedure. The study was done across a network of five hospitals known as Baptist Health System in San Antonio. This network has been using this system longer and has been experimenting with alternate payment structures since 2008. Over that time, they have been able to reduce Medicare costs by nearly 21 percent.

The most remarkable part of this system is that there is no indication of a decline in the quality of care provided, despite the huge impact on costs. Rates associated with patients being readmitted, visiting the emergency room, the duration of hospital stays, and recovery time all revealed that service quality had not suffered. In fact, many improved, leading some to believe that bundled payments have the potential to create a system where even better health care services can be provided.


Detractors: Weighing Risks and Rewards

While many are singing the praises of this billing system, others view the change as unwelcome and unnecessary. Influential medical professionals, such as Doctor Tom Price, President Trump’s HHS nominee who is also a Georgia congressman and orthopaedic surgeon, does not support the shift. He’s referred to bundled payment as “experimenting with Americans’ health,” and has opposed the notion publicly on several occasions.

President Trump’s promises to repeal the Affordable Care Act leave the future of these systems uncertain. Some hospitals are hoping that the initiatives will be made voluntary, as implementation can be costly with tight financial resources, even if long-term savings could result. The health information technology and care-management services required to successfully run the bundled payment programs can create challenges, largely due to substantial setup costs.

According to the Greater New York Hospital Association, the risk is also much higher for hospitals that rely on Medicare and Medicaid or disproportionate-share hospital payments. Other hospitals have expressed concern that the significant shift required to implement the models and integrate them with existing systems would be enough to financially devastate some institutions. Some laud the efforts of the CMS but foresee issues with the timeline set forth.

The uncertainty of implementation and results have led many to question the validity and efficacy of these programs, despite promising early results. The implementation of several new payment models have been postponed until later in the year.


Facing Change with Strategic Technology and Partnerships

Regardless of the future of bundled payments, pricing strategies and innovative approaches to saving money at every level of healthcare is critical. With cut costs and limited funding, hospitals, distributors, and manufacturers all need to reassess operations and structures that can be reconfigured without sacrificing quality of care or patient safety.

Prepare for the future of medicine with sustainable budgets and cutting edge processes that equip organizations to take on policy changes and technological advancements. Improve efficiencies, limit liability, and integrate technology to stay ahead of industry trends with help from the team at SimplOR. End-to-end case management solutions are designed to enhance patient treatment and reduce costs for health care providers, manufacturers, and suppliers. Reach out to discuss business operations and learn more about streamlining processes and saving on costs.