The Business of Healthcare: The Role of Physician Integration in Bundled Payments

Vlachy, Jan; Ayer, Turgay; Ayvaci, Mehmet; Raghunathan, Srinivasan

doi:10.2139/ssrn.3539596

Cited by 4 publications

(2 citation statements)

References 36 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…al. (2020) study the impact of the level of physician integration (defined as “hospital’s ability to influence physicians’ care intensity”) on the outcome of bundled payment models in the presence of gain‐sharing agreements. They show that hospitals with lower level of integration are more likely to participate in bundled payment models.…”

Section: Literature Reviewmentioning

confidence: 99%

Care‐coordination: Gain‐sharing Agreements in Bundled Payment Models

Ghamat

Zaric

Pun

2021

Production and Operations Management

View full text Add to dashboard Cite

We study gain‐sharing agreements in a target price‐minimum quality payment system. Our work is inspired by the Centers for Medicare and Medicaid Services’ (CMS) Comprehensive Care for Joint Replacement (CJR) bundled payment model. In our model, patients receive care from a hospital and a post‐acute care provider. A third‐party payer establishes target levels for total billing by the hospital and provider, and a target on the overall quality of care. The hospital and provider receive fee‐for‐service (FFS) billings during an episode of care, defined as the period that starts with an admission of a patient to the hospital and ends 90 days post‐discharge. The hospital may also receive an incentive payment if total FFS billing by both parties is below the target price and total quality by both parties is above the minimum quality. The goal of the incentive payment is to encourage hospitals to enter into “gain‐sharing” agreements with providers. We model the interactions between the three parties. We show that while using a gain‐sharing agreement might be a “win‐win‐win” scenario for the three parties, good design of the payment scheme by the payer is essential to incentivize a hospital to participate in the bundled payment model (e.g., CJR) and sign a gain‐sharing agreement with the provider. Furthermore, we illustrate that a target price‐minimum quality bundled payment model would be more effective, in care‐coordination, in healthcare settings where the provider is much more effective than the hospital in reducing its billing.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Care‐coordination: Gain‐sharing Agreements in Bundled Payment Models

Ghamat

Zaric

Pun

2021

Production and Operations Management

View full text Add to dashboard Cite

show abstract

“…They design hybrid payment and stop-loss mechanisms to overcome drawbacks of these schemes. Vlachy et al (2017) focus on the extent to which hospital-physician integration is needed for successful implementation of bundled payment programs. They show that the hospital with moderate level of physician integration can benefit more from bundled payments.…”

Section: Literature Reviewmentioning

confidence: 99%

Gainsharing Contracts for CMS’ Episode‐Based Payment Models

Gupta

Mehrotra

Tang

2021

Production and Operations Management

View full text Add to dashboard Cite

The Centers for Medicare and Medicaid Services (CMS) has introduced several Episode‐based Payment Models. Episodes are combinations of pre‐acute, acute, and post‐acute services for particular medical conditions. During the year, CMS pays hospitals according to historical norms. At the end of the year, these payments are reconciled against a target price, resulting in either a gain or a loss for the hospital. The hospital may also realize gains or losses from its internal operations. It may incentivize physicians to select certain treatment levels that improve quality and reduce costs by offering to share gains and losses. CMS has placed restrictions on what gains or losses may be shared and implemented stop‐loss and stop‐gain (SLSG) provisions for the hospital and the physicians. In this study, we consider a class of affine gainsharing functions that calculate a physician’s per‐episode share based on both the aggregate performance across all physicians, and the cost and quality outcomes achieved by that physician. We show that when there are no sharing restrictions and no SLSG provisions, an optimal gainsharing function lies in the class of affine functions. In contrast, when there are SLSG constraints, the contract design problem is analytically challenging. Therefore, we perform a series of numerical experiments, which reveal that the hospital SLSG provisions, the maximum savings potential, and the hospital’s risk preferences determine the amount of gains and losses that the hospitals share and the resulting treatment levels. From the CMS perspective, we show that SLSG constraints matter more to hospitals with higher historical average billing and higher risk aversion.

show abstract