Hospitals are not ready for bundled payments

Effective April 1 many hospitals will be paid a bundled fee for Knee and Hip replacement surgeries. This is a part of the overall strategy by CMS to move providers away from Fee for Service to Value Based Payment model. CMS’ goal is to make such payments reach 30% of all reimbursements for this year. It is a lofty goal but we all know that is the direction all providers have to transition to.

Bundled payments create a host of challenges for hospitals. CMS still pays everyone involved in the care process on the fee for service model but at the end of episode of care (90 days) CMS either pays the hospital for efficiency or penalizes them by asking hospitals to pay back the excess money that CMS paid over and above the hospital’s standard rate. There is no doubt that to make healthcare providers more responsible for outcomes rather than just for providing services, value based payments is a great idea. But many hospitals in the country are nowhere near ready for such a payment model.

At the current time hospitals do not have technologies in place that they can use to monitor and measure a patient’s care across hospitals and providers. An acute care facility and a post-acute care facility may or may not talk to each other. The doctors in one acute care hospital do not communicate with the doctors in another post-acute care hospital. The post-acute care hospital may or may not have an EHR system. Even if they have one, the two EHRs may not be talking to each other. Same is the case with primary care physician offices, surgeons offices, outside rehab facilities. So how can a hospital keep track of the care being provided to a patient for 90 days after the surgery? Most of the hospitals today do not have an idea of how each of their own service costs them in their hospital. How are they supposed keep track of costs across the care settings?

Hospitals now not only need to communicate closely with each other but also get involved in each other’s operations. All discharges and discharge medications have to be reviewed by the doctors from the acute care facility with the doctors from the post-acute care facility. Not only that, they have to continuously monitor the care and progress of the patient outside of their facility. They need to start implementing systems that will enable 360 degree communication and interface with all the providers involved in each episode of care. They need to start doing this now because it is hard to stop a train.