The Potential of Payment Reform Efforts

Submitted by on Friday, May 1, 2015 - 01:46

Newtown, CT – May 1, 2015

"A little learning is a dangerous thing;
drink deep, or
taste not the Pierian spring:
there shallow draughts intoxicate the brain,
and drinking largely sobers us again."
– Alexander Pope (1688 – 1744)

And so it goes with payment reform efforts such as bundled payments where, recently and often, we've noticed that providers and payers are caught up with the intoxicating prospect of capitalizing on a rapidly changing delivery system. Provider organizations across the country are looking at either purchasing or teaming with third party administrators to offer bundled services to employers or plans. The general theme adopted is to focus on a few episodes of care for which the provider has developed good expertise, and to negotiate and contract for a bundled price. Having designed, piloted, refined, and scaled out the pioneer program in this field, we have drunk largely the font of knowledge that comes from years of trials, tribulations and successes and we are both sober and deeply energized. Along the way came some important lessons that we share:

  1. Don't aim small – there is a tendency to start small to test the waters, but the people and systems resources required to scale a bundled payment program make it very hard to justify such an investment on small numbers.
  2. Don't take shortcuts – adjust for the severity of patients; define the episodes rigorously and always include warranty periods; account for within-market price variations; don't bake in underuse of needed services; never launch the payment pilot without a solid clinical quality scorecard.
  3. Start now upgrading your claims and benefits systems – you simply will not be able to scale your program without a state of the art claims adjudication and benefits management operating system, and you have to start that upgrade the day you launch your pilot. TPAs that claim they can automate your bundled payment program with little forward investment are simply lying.
  4. Always look ahead – you need a plan for the post-pilot roll-out and that plan should be designed and defined when the pilot is launched. Too many programs wallow in pilot phase and fail to capitalize on market changes.
  5. Understand the clinical links between episodes – many episodes of care are related to others clinically, and bundled payment contracts should strive to embrace those links to keep the physician's focus on the whole patient, not just pieces of the patient.

The acquisition of the knowledge behind these lessons has been hard and taken a long time, but once understood truly opens up the full potential of this payment reform effort. And because the knowledge exists, there simply is no excuse for ignoring it, unless you really want to experience the mother of all hangovers.