Patients experiencing heart failure may not have as many out-of-pocket costs for cardiac-specific hospital care beginning as soon as October if plans by one East Valley hospital to simplify its payment structure go into effect.
Banner Heart Hospital in Mesa, in conjunction with a new Medicare program, is experimenting with a “bundled care” project that attempts do just that — bundle the cost of care across various aspects of treatment into a more reasonable, manageable and potentially affordable outcome for patients.
The East Valley hospital hopes to have a contract approved by the Centers for Medicare and Medicaid Services (CMS) solely for Medicare heart failure payments by the fall.
The CMS devised the plan under the Bundled Payments for Care Improvement initiative that will allow flexibility of payment with an “episode of care” that spans diagnosis to admission to rehabilitation, said Eugene Schneller of Arizona State University’s W.P. Carey School of Business.
As Schneller, a supply chain management professor with a background in health policy, explains it, doctors and hospitals will collaborate at all points of care — say, for example, from the point a patient is admitted with heart failure, through surgery, and on to physical therapy and other rehabilitative efforts. The purpose, he said, is to enhance efficiency and reduce costs, a term called co-management.
“We haven’t received anything back from Medicare yet. And there is always uncertainty depending on what rules they lay down,” said Dr. Mark Starling, chief medical officer at the Banner Heart Hospital of whether or not the hospital would agree with what is approved by CMS.
When it is approved, the Banner Heart Hospital’s bundled care Medicare contract will begin the Bundled Payment Innovations Care Project specifically with heart failure patients, Starling said. The payments will eventually be prospective, meaning the payment is received before admission and covers all care and services up to 90 days after a patient’s discharge.
The project’s payment method will still be “fee-for-service” for now. The hospital will be paid in a lump sum (much like a bundled payment), but unlike traditional fee-for-service care, payments will occur before admission. In this case, efficiencies in the process will allow the care to cost two to three percent less than traditional fee-for-service payments, Starling said.
If the project is successful, then in a few years the Mesa heart hospital, located at 6750 E. Baywood, Ave., adjacent to Banner Baywood Medical Center, will analyze what worked and what didn’t, he said.
Developing the project came at very little cost; Starling mentioned the hospital started a program in mid-2011 that reduced the amount of readmissions of heart failure patients from 25 percent to 14 percent. The hospital has worked on improving other forms of care as well.
Some goals of the bundled payment program, with Medicare and Medicaid, are “improved outcomes because the care would be better integrated and hopefully to be able to reduce costs,” said Schneller, who is also co-director of the Health Sector Supply Chain Research Consortium at ASU’s business school.
“What bundled payments do is they bring together a variety of parties in healthcare that have formally been fairly independent with each other” but that are connected by a common denominator — the patient, he said.
The chief medical officer said the Banner Heart Hospital reached out and formed collaborations with physicians, nursing facilities and homecare agencies.
“The bundled concept gives us an opportunity to really think how we build partnerships and relationships and manage patients better and more effectively,” Starling said.
Eventually, the standard for heart failure will outline other disease-specific payments, also known as a diagnosis-related group that specifies all services, devices and treatment of a disease that would be billed to an insurer, he said.
“It’s going to be an interesting challenge to find if — what we think works — will actually work in reality,” he said.
Why kick off the program with heart failure? — Because Starling explained it is Medicare’s largest expense, and it has a high rate of readmission.
Schneller noted that in theory the CMS’s initiative — in addition to the Obama administration’s Affordable Care Act — should improve the quality of patients’ care because hospitals will be required to submit outcome reports.
“However, the idea here is that there is a lot of waste and inefficiencies in medical care,” said Marjorie Baldwin, professor of economics at the W.P. Carey School of Business.
A bundled payment program could also lead to more efficient hospitals being rewarded, while hospitals with negative outcomes would be held more accountable, Schneller said.
So, if providers are willing to work together for more efficient care practices, then they can make a profit by way of their contracts with healthcare insurers, said Baldwin, who was the director of the School of Health Management and Policy, a department at the W.P. Carey School disestablished in 2010. If they step over the fixed payment, well then they are running a loss.
On the consumer end, Baldwin believes the bundled payment program won’t actually lower the price for care; rather, care will be better at a similar cost.
“I think the costs are not being driven by inefficiencies,” she said. “They’re being driven by advances in technology that is more and more expensive.”
Advances in medical imagery like MRIs that improve livelihood are more expensive to conduct rather than an X-Ray, she said, and this is what ramps up healthcare costs.
“We're at the beginning of looking at these kinds of payment innovations and time will tell just how well they work,” Schneller said.
Corey, a junior studying journalism at Walter Cronkite School of Journalism and Mass Communication, is an intern for the East Valley Tribune. Contact him at (480) 898-6514 or firstname.lastname@example.org.