As I am currently employed by PinpointCare (pinpointcare.com), I would like to explain why we are in business. To do that, I must define the Bundled Payment. The Center For Medicare And Medicaid Services or CMS ( formerly called the Health Care Financing Administration) is working towards enabling a “Value-Based” care environment. A Bundled Payment is a form of Value-Based care.
Value-Based care is essentially oriented towards payment for making patients well. At PinpointCare, our focus is currently on Orthopedic Surgeries. CMS has focused on Orthopedic Surgeries as it is an area where they have seen a wide disparity of charges for an episode of care in one area of the country versus another. So, CMS is creating these models where a provider manages the whole episode of care (evaluation, surgery, and post-acute care) and receives a lump-sum payment for the whole episode. This is contrasted with Fee-For-Service which has been mostly in effect until now. Fee-For-Service leads to overpayments and fraud, as it is the model where a provider gets paid for every encounter with the patient, no matter if it helps the patient get well or not.
The Bundled Payment is a model for Value-Based care. One provider, either the hospital or doctor’s group, will assume the risk of getting a patient well. This managing provider agrees on a contracted price from CMS such that this provider is responsible for the surgery and post-acute care. The managing provider will profit if the cost of the episode of care costs less than the contracted price. If the episode of care costs more than the contracted price, then the provider will need to eat that cost. It makes the provider accountable for the patient’s recovery. So, the Bundled Payment is simply the concept of this lump sum payment for care. The concept was born out of the Affordable Care Act. Stay tuned for what happens next (with the new administration)! You can Google “Bundled Payments” for more details.
So, what do Bundled Payments have to do with PinpointCare?
PinpointCare has a “Coordinated Care” software platform. Coordinated Care is the idea that all providers involved in an episode of care must communicate with each other and document a specific piece of information only one time, versus many times.
Our platform promotes efficiency in that providers (hospital, physician, skilled nursing, home health, physical therapy) have logins to our system, so all the information that each provider enters is all in one place and is not duplicated.
Our platform promotes communication as we have notifications that tell the next provider in the continuum of care when they will start their next phase.
This is how we help our customers reduce their costs and improve their quality….a necessity for our customers who are the ones who are at-risk for the entire episode of care.
I just did some research on how payment reconciliation works for “Bundled Payments”.
So, there is a provider, either a medical group or hospital that negotiates the price of the bundle with medicare. Let’s say that it is the hospital that is the provider at risk. The hospital is responsible for the whole episode of care. You would think that the payment for the bundles would be made to the hospital and that the hospital would then distribute the payment among the participating providers (skilled nursing, home health, and/or physical therapy). But that is not the way it happens at this point in time. It’s enough that the way care is provided is different than the fee-for-service model. It would be too much change all at once for billing changes on top of care changes.
So, Medicare pays everybody just like they always have. The hospital gets their piece, the skilled nursing facility gets theirs, Home Health gets theirs, PT gets theirs (directly from Medicare). However, there will be a retrospective, reconciliation process, let’s say 6 months later. (There are companies that do the reconciliation of payments.). If the actual cost of service (for hospital, SNF, HH, PT) comes in higher than the negotiated contract of the bundle, then the hospital is on the hook for the cost overage. Likewise, if the total cost of the bundle happens to be greater than the actual total cost of everything, then the hospital will pocket the difference. Bottom line is that the hospital (or provider that takes the risk) is responsible, and the hospital either profits or loses, depending on the ability to deliver the care for the negotiated contract price. The post acute care providers will not be affected by the actual cost to deliver the care since they are not the ones taking the risk.
Caveat: Overtime, the hospital may decide to incentivize some of its best partners, SNFs, HHs, PTs by sharing the extra profits if the total cost is lower than the bundle costs. But, if they do this, they will also ask them to bite the bullet and share in the overages if the bundle charges are greater than actual charges… in essence they will be asking
the PAC providers to share in the risk with benefit of making more but also risk of losing more.