Newtown, CT – June 15, 2012
There are only ten Commandments. Everything else is pretty much a guideline – During the next two weeks, hospitals, physicians, and others will decide whether or not to apply to the CMMI's Bundled Payment pilot. Many, including some that participated earlier this week in the Bundled Payment Summit, have concerns about the design of the pilot proposed by CMMI. They fear the risks can be high and the reward dependent on the pure luck of the draw. We've shared those concerns and expressed them publicly. Yet on Wednesday, Valinda Rutledge, who heads up this pilot at CMMI, was very clear that the design guidance provided is just that. Applicants are encouraged to innovate, to propose designs that will appropriately share risk between CMS and providers, to craft solutions that will reward good quality and cost performance and not subject the provider to unreasonable probability risk. We take Valinda at her word, and encourage all to forge through the application process, and make a proposal to CMMI for participation in the pilot. After all, what's the worst that can happen? If CMS rejects the proposal, bring it to private payers, for their constraints are significantly less than Medicare's.
What this means to you – Over the past six months, as provider organizations across the country have analyzed the Medicare claims files for their area, a new reality has set in. The cost of a knee replacement is more than a DRG payment. In fact, depending on the time window chosen for the analysis, the total cost of that episode can be twice or more the price of the DRG. Post acute care costs vary massively, sometimes for no apparent reason than a seemingly random choice of settings. Complications occur frequently and add to the costs of episodes. This reality has led to a better understanding of the challenges and opportunities ahead. For all intents and purposes, hundreds of hospital and physician leaders have had a crash course on bundled payments. And none of us should let that education go to waste. In the next two weeks we will be offering up ideas and suggestions on how to craft an application that will mitigate for probability risk and key in on improving margins while reducing complications. These design elements are central to our work in the private sector, and the bundled payment implementations that are being led by innovative providers and health plans across the US. It takes two to contract, and right now, crafting the terms of the deal is in the applicant's hands. They should propose something that makes sense to them, balancing risk and reward. And if the deal doesn't go through, so be it. There are plenty of private sector payers eager to sign a sensible deal.
Francois de Brantes
Health Care Incentives Improvement Institute, Inc.