Episode-Based Payment: Evaluating the Impact on Chronic Conditions

O’Byrne, Thomas J.; Shah, Nilay D.; Wood, Douglas L.; Nesse, Robert E.; Killinger, Patrick J.F; Litchy, William J.; Stroebel, Robert J.; Wagie, Amy E.; Naessens, James M.

doi:10.5600/mmrr.003.03.a07

Cited by 19 publications

(22 citation statements)

References 6 publications

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“…Some studies have defined an episode of care as the period beginning with increased resource utilization and ending when utilization returns to baseline . Other studies have attempted to define and capture total medical costs for broadly defined disease populations or for common diseases, including diabetes and coronary artery disease . However, the associated comorbidities make it difficult to attribute the resource utilization and costs to the disease of interest.…”

Section: Discussionmentioning

confidence: 99%

Impact of standardized clinical assessment and management plans on resource utilization and costs in children after the arterial switch operation

Rathod

Jurgen

Hamershock³

et al. 2017

Congenital Heart Disease

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Section: Discussionmentioning

confidence: 99%

Impact of standardized clinical assessment and management plans on resource utilization and costs in children after the arterial switch operation

Rathod

Jurgen

Hamershock³

et al. 2017

Congenital Heart Disease

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“…Bundled payment implementation (Hussey, Ridgely, & Rosenthal, 2011; Ridgely, De Vries, Bozic, & Hussey, 2014) and the design of bundled payment models for chronic care (O’Byrne et al, 2013) has been challenging, though a bundled payment for diabetes care in the Netherlands did lead to improved care coordination (de Bakker et al, 2012). …”

Section: Introductionmentioning

confidence: 99%

Design and impact of bundled payment for detox and follow-up care

Quinn

Hodgkin

Perloff

et al. 2017

Journal of Substance Abuse Treatment

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Introduction Recent payment reforms promote movement from fee-for-service to alternative payment models that shift financial risk from payers to providers, incentivizing providers to manage patients’ utilization. Bundled payment, an episode-based fixed payment that includes the prices of a group of services that would typically treat an episode of care, is expanding in the United States, including mandatory models in Medicare. Bundled payment has not been developed specifically for substance use disorder (SUD) treatment. Yet, bundled payment has been recommended as a way to pay for comprehensive SUD treatment and has the potential to improve treatment engagement after detox, which could reduce detox readmissions, improve health outcomes, and reduce medical care costs. However, if moving to bundled payment creates large losses for some providers, it may not be sustainable. The objective of this study was to design a bundled payment for detox and follow-up care and to estimate its impact on provider revenues. Methods Massachusetts Medicaid beneficiaries’ behavioral health, medical, and pharmacy claims from July 2010–April 2013 were used to build and test a detox bundled payment for continuously enrolled adults (N=5,521). A risk adjustment model was developed using general linear modeling to predict beneficiaries’ episode costs. The projected payments to each provider from the risk adjustment analysis were compared to the observed baseline costs to determine the potential impact of a detox bundled payment reform on organizational revenues. This was modeled in two ways: first assuming no change in behavior and then assuming a supply-side cost sharing behavioral response of a 10% reduction in detox services and an increase of one individual counseling and one group counseling session. Results The mean total 90-day detox episode cost was $3,743. Nearly 70 percent of the total mean cost consists of the index detox, psychiatric inpatient care, and short-term residential care. Risk mitigation, including risk adjustment, substantially reduced the variation of the mean episode cost. There are opportunities for organizations to gain revenue under this bundled payment design, but many providers will lose money under a bundled payment designed using historic payment and costs. Conclusions Designing a bundled payment for detox and follow-up care is feasible, but low case volume and the adequacy of the payment are concerns. Thus, a detox episode-based payment will likely be more challenging for smaller, independent SUD treatment providers. These providers are experiencing many changes as financing shifts away from block grant funding toward Medicaid funding. A detox bundled payment in practice would need to consider different risk mitigation strategies, pooling providers, and an increased reimbursement rate, but could incentivize care coordination, which is important to reducing detox readmissions and engaging patients in care.

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“…It has been suggested that new reimbursement models and strategies for providing diabetes mellitus care be considered, including bundled payment models that cover the full costs of services (11). Yet, although proposed for more than a decade, such models have yet to be implemented in most areas.…”

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confidence: 99%