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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.

 

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