Blog Posts


Bundled Payments in Healthcare: How EmCare’s Parent Company Is Developing a New Payment Philosophy

Posted on Mon, Mar 14, 2016
Bundled Payments in Healthcare: How EmCare’s Parent Company Is Developing a New Payment Philosophy

By Daniel Castillo, MD, MBA
The presidential election cycle is heating up, and once again an important topic is our costly healthcare system.  Some candidates preach about repealing and replacing the Affordable Care Act (ACA), while others speak about making modifications or pushing for a one-payer system.  Recent analysis that has been quoted on the debate stages and during town halls finds that by 2021, 20% of GDP will be spent on healthcare. So, whichever party or candidate you support, healthcare and how to reign in costs while promoting quality will continue to be an important issue.   

Despite this higher spending, studies from organizations like the Commonwealth Fund have shown that compared with other developed nations, the U.S. health care system ranks last or next-to-last on five dimensions of a high performance health system: quality, access, efficiency, equity and healthy lives. Much of this high cost and sub-optimal quality has been attributed to the waste in our healthcare system driven by fragmentation, poor coordination and a payment model that has historically rewarded volume over value.
The Bundled Payments for Care Improvement (BPCI) initiative is a national program sponsored by the Center for Medicare and Medicaid Innovation (CMMI) designed to manage costs and improve quality for Medicare patients. Under the BPCI initiative, different organizations – for example, hospitals, post-acute care companies and physician groups – agree to payment arrangements that include financial and performance accountability for episodes of care. These models aim to lead to higher quality and more coordinated care across the spectrum, all at a lower cost.

To succeed in value-based care programs like BPCI, it is critical to manage and coordinate care in a patient-centered way across the continuum – breaking down the long established silos that currently exist. Envision Healthcare is in a unique position to thrive in a BPCI environment - since Envision is the parent of EmCare, a hospital-based company; AMR, a pre-hospital care company; and Evolution Health, a post-acute care company – providing high-quality care across the continuum is in the DNA. 

As healthcare continues to move from the fee-for-service, volume-oriented model to focusing and rewarding value, Envision Healthcare’s capabiliies will become even more important for providers, patients and partners.   The natural by-product of lower costs and higher-quality care is improved patient satisfaction and reduced readmissions. Envision Healthcare draws from a diverse team of clinicians to provide the right care when it’s needed, wherever the patient resides. With our scope of expertise and scale of operations, we are uniquely positioned to provide BPCI and other value-focused solutions.

Defining BPCI Models

CMS is testing four models of payment to determine which approach(es) improve care and lower costs to Medicare.

  • In Model 1, the episode of care is defined as the inpatient stay in the acute care hospital. Medicare pays the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare continues to pay physicians separately for their services under the Medicare Physician Fee Schedule.

  • Model 2 and Model 3 involve a bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care. In Model 2, the episode includes the inpatient stay in an acute care hospital plus the post-acute care and all related services up to 90 days after hospital discharge. In Model 3, the episode of care is triggered by an acute care hospital stay but begins at the initiation of post-acute care services with a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. Under these payment models, Medicare continues to make fee-for-service (FFS) payments; the total expenditures for the episode is later reconciled against a bundled payment amount (the target price) determined by CMS. A payment or recoupment amount is then made by Medicare reflecting the aggregate expenditures compared to the target price.

  • In Model 4, CMS makes a single, prospectively determined bundled payment to the hospital that encompasses all services furnished by the hospital, physicians, and other practitioners during the episode of care, which lasts the entire inpatient stay. Physicians and other practitioners submit “no-pay” claims to Medicare and are paid by the hospital out of the bundled payment.

Envision Healthcare currently has active BPCI programs in Model 2 and Model 3 arrangements. In BPCI Model 2, the care begins with a hospital admission (from an EmCare hospitalist) and continues through the post-acute recovery (via Evolution Health). AMR often provides community paramedics to manage any gaps in care. For BPCI Model 3, the care starts after the patient is discharged from the hospital. As Evolution Health patients, they have access to the Medical Command Center, which uses Evolution Health’s nurse navigators, EmCare physicians and AMR caregivers.

BCPI is an important initiative for raising the quality of care and lowering costs – improving the value of our healthcare system. Envision Healthcare will continue to be national leader in value-based care and innovation – pioneering the delivery care. 

Daniel Castillo, MD

Daniel J. Castillo, M.D., MBA, is Chief Strategy Officer, Chief Quality Officer and Executive Vice President of Population Health for Evolution Health. Dr. Castillo is an experienced healthcare leader with expertise in system design, integrated delivery, measurement and competitive strategy for physician services and population health optimization. Before this role, Dr. Castillo served as Medical Director for Healthcare Quality Evaluation at The Joint Commission. At The Joint Commission, Dr. Castillo led product development including national standards, performance metrics and research that focused on innovative approaches for value-based healthcare. Most recently, he led the development of standards for Integrated Delivery System certification. He has partnered to lead hospitals, health systems, payors and providers in quality improvement, certification and accreditation. Particular areas of experience include provider credentialing and privileging, primary care, hospital and ambulatory care safety, perinatal care, advanced imaging, stroke systems of care, home care, palliative care and hospice, and infusion therapy.

He is an honors graduate of The University of Chicago Booth School of Business and the Medical College of Wisconsin. Dr. Castillo completed his emergency medicine residency at Northwestern Memorial Hospital and continues to practice clinically as an emergency physician at NorthShore University HealthSystem in Evanston, Ill.



Six Potential Surprises from Health Insurance Reform

Posted on Mon, Oct 14, 2013

By Steven R. Schaerrer Divisional Client Administrator, EmCare

hcreformMere months before major elements of the historic Affordable Care Act take effect, polls show that nearly 70% of all Americans still don't understand the basics of health insurance reform or the impact it will have on their lives. As plans take shape for the opening of the first-ever public health insurance exchanges in October, the picture is slowly becoming clearer as to how President Barack Obama's ambitious, intricately layered health care overhaul will affect the nation.

With the full effect of health care reform just months away, here are six ObamaCare consequences that are coming to light -- some unforeseen, others that only seem that way.

1) You Could Lose Your Existing Health Plan

In 2009, Obama reassured Americans, "If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what." So why are some insurers notifying policyholders that their health plan is being discontinued? The short answer: Insurers are phasing out some plans and are replacing them with others designed to meet the new federal minimum value and affordability standards for individual and small-business plans under health insurance reform. Technically, you can still hold onto your policy, thanks to language in the law that allowed existing health plans to be "grandfathered" in, thus exempting them from the new requirements. But experts say once you're offered better coverage for less, why wouldn't you make a move?

2) Big employers may offer bare-bones coverage

Large companies with many low-income and currently uninsured workers, such as restaurant chains and retailers, are flirting with offering a barely qualifying version of a"mini-med" health coverage to sidestep ObamaCare's $2,000-$3,000 per-employee penalty for failing to offer qualifying coverage. That "employer mandate" was to take effect January 1, 2014, but has been delayed until 2015. Incorporating so-called skinny coverage that may not take care of X-rays, surgery or maternity care is just one of several cost-cutting options that large employers are exploring to offset the additional expenses of health reform. Tracy Watts, national health care reform leader at Mercer, a global research and consulting firm, says the goal for these employers is to design a bare-bones plan that costs them less than the penalty for not offering coverage and doesn't appear too enticing to those who currently opt out of coverage or insure through their spouse. "The question is, how many people would have to enroll before you would spend as much as you would on the $2,000 penalty, and do you think that many people would enroll?" she says.

merger.jpg3) Hospital mergers may thwart reform goals.

The recent trend toward hospital consolidation would seem to work at cross purposes with health insurance reform's central mission of seeding the private health care market with incentives that will blossom into better care at a lower cost. After all, studies have shown that when hospitals merge, just the opposite happens. According to the American Hospital Association, more than 550 hospitals have been acquired since 2007. A similar spike in mergers and acquisitions followed the rise of health maintenance organizations, or HMOs, in the mid-1990s."If you have more and more consolidation of providers (hospitals), it makes it more difficult for insurers to be tough price negotiators," says Blumberg.

4) Young people may benefit most from Obamacare

Despite dire predictions of "rate shock" for millennials, most of today's young adults are best positioned to benefit from health care reform, thanks to federal subsidies that should make quality health insurance affordable for this largely unmarried, lower-earning population beginning in 2014. There are an estimated 21 million young Americans who are uninsured, and the overwhelming majority of them have incomes in the low-to-moderate range. Most will be eligible to purchase affordable coverage with federal assistance through the new state exchanges, beginning with early enrollment in October.

tax-increase.jpg5) Tax on 'Cadillac' plans hits middle class

Millions of Americans anticipate buying health insurance for the first time through new public exchanges to avoid penalties for not having insurance under health care reform's "individual mandate" that takes effect in January. At the same time, some employers are already scaling back their group health plans to avoid a 40 percent excise tax on high-cost, or "Cadillac," plans that do not take effect until 2018. The tax will hit individual plans costing more than $10,200 and family coverage costing more than $27,500 annually. A Washington, D.C.-based think tank, the Economic Policy Institute, has criticized the tax as "not well-targeted" because it is likely to impact many unsuspecting workers with rather ordinary health plans that happen to cost a lot because of company size, job location and other factors. The institute says the tax creates a strong incentive for employers to move toward cheaper and less-generous coverage that shifts more costs onto workers. Watts says "about a third" of companies are making corrections now to keep their "Cadillac" plans out of the ditch, with most moving toward "consumer-driven" platforms in which employees are given a fixed sum and allowed to shop for their best health and benefits fit.

6) Obamacare could be good for entrepreneurs

"Job lock" aptly describes the economic force that keeps employees tied to a job for the health care coverage. The Affordable Care Act may provide "job unlock." A new study by the Robert Wood Johnson Foundation, the Urban Institute and the Center on Health Insurance Reforms at Georgetown University finds that health insurance reform will likely unleash 1.5 million Americans to pursue their entrepreneurial dreams.