Bundled payment is also referred as episode-based payment, which is placed at the forefront of discussion of national ways that can be strategically used in combat of the rising cost of health care service providing (Rosen et al., 2013). The current dominating payments in the health care which are costly to most of the patients include fragmented payments. As such, the patient is expected to pay for the hospital, post-acute providers file, physicians’ fee and even fee for service models (Shih, Chen & Nallamothu, 2015). This form of payment has little incentives, poor coordination, and lack of good communication across multiple health providers. In contrast, episode payment, which is aimed at reducing the health care service providers’ fee, is aligned to the interest of the providers (Rosen et al., 2013). As such, it ensures there is a fixed payment in a single episode care where the patient pays for all services once regardless of the health care center or facility involved in delivering the services. According to Rosen et al. (2013), it is not a new policy; it has resurfaced in this era as a way of combating the increased rise in the health care cost, while at the same time maintaining the health care quality.
One of the health care areas that bundled payment can be more impactful and significant is the cardiovascular division. Although the system has been implemented in this area, the future can be even better if the policy is adhered to the latter. Among the reasons that make this area in the health care facilities to be possibly the most significant in the implementation of the policy include the high expenses of the services provided and the different health care providers involved. Cardiovascular diseases are common and result in a high mortality rate; thus, should be highly considered in the enhancement of the treatment procedures and the expenses involved (Go et al., 2014). These diseases are not treated with a single health care providers thus fragmented payments can be too expensive for the patients to afford. The multiple health providers involved in the treatment of the cardiovascular diseases include radiology, cardiac surgery, primary care and anesthesiology (Go et al., 2014). In addition, various amenities such as skilled nursing facilities, outpatient primary care, hospitals and subspecialty clinics are necessary for the treatment process. For improved care, coordination and reduced expenses in the cardiovascular care, bundled payments are necessary. This exposition explores the objectives, initiatives, management, and impact of the bundled payments in the health care system.
The primary objective of bundled payment as previously stated is to ensure that the health service providers receive a fixed lump sum payment. This payment is expected to be divided among all the facilities and the health providers involved in the health care services (Press, Rajkumar & Conway, 2016). The bundled payment policy is driven by the initiative of decreasing the health care expenses which are a major challenge in our health care system era. Such costs involved to be decreased based on this policy with and intent of cost savings include physician services, post-acute care, readmissions and index hospitalization (Froimson et al., 2013). The providers of the health care services, such as include physician groups, hospitals, and other medical facilities, establish bundled payments based on an agreement with the payers where they set a target price for the different clinical conditions, which is adjusted at times based on the severity of the conditions.
When setting the target price, the payers have to look at the mean pricing in the historical payments and the overall variations. Thereafter, the payers enter into negotiations with the service providers and set the episode payments which may range from 1 to 2% below the case rate (Shih, Chen & Nallamothu, 2015). Based on this model, the health care service providers are objected to providing efficient health care while having a reduction in the cost and the number of health services in the bundle. The bundled payment model creates a relationship between the payers and the providers where both the losses and savings are shared. In some cases, the health care cost may fall below the lump sum payment, in such case both the payers and the providers keep the amount realized as the difference to be an additional profit (Press, Rajkumar & Conway, 2016). However, the providers are expected to provide extra services which may incur them a loss though the payers are expected to reduce some of this loss.
The episode payments lie in the middle ground of the health care payments model as depicted in figure 1.
Figure 1: Spectrum of Health Care Payment Models. Source Shih, Chen, and Nallamothu, (2015).
The bundled payments are also considered to be a shift from the traditional health care payments models where the health care service providers are paid separately based on the different services provided. The global payments that are expected to accommodate all the multiple conditions of the patients require the episode payments to occur distinctly and be reimbursed separately (Shih, Chen & Nallamothu, 2015). Bundled payments are so far considered to be more cost effective as compared to the traditional payments methods are per the observations of the health care service providence and health care policy in the class materials. As such, the driver of the health care system in this era is the cost and the quality of services received from the cost paid.
Some of the factors that lead to an increased cost in the health care service Providence include the health care inflation to a general double rate which is unstainable. In addition, the increased cost of the traditional payments is driven by a change from business oriented purchase to a consumer-centric model, which results in a high deductible plan that affects the provider system configuration (Class materials). The health care policy is necessary for creating an equal financial status since the health care industry forms a significant economic industry and necessary facility for the welfare of the citizens of a country. As such, it not only ensures productivity but creates employment opportunities which form an important economic income of a country. In addition, huge value is accrued from the health care sector through the pharmaceutical sector, health care delivery systems and medical, and industrial complexes, hence, maintaining predictable health care expenses is necessary for insuring the future of the health care domain unlike using traditional payment methods (Class materials).
Implementation of Bundled Payment Philosophy
As per the health care changes in this era, many organizations are implementing bundled payment programs as one of the strategies in executing the value-based reimbursement strategies (Miller et al. 2017). Embracing of this program in the health care market is driven by the demand for the leadership to come up with operational improvements that can lead to service differentiation, tighter physician alignment and meeting of the patients’ demand. Coming up with a bundled program is achieved through adhering of three phases which include decision making in offering a bundle, selection of an ideal bundle payment program and implementation of the program. There are several activities necessary in the implementation of the bundled payment program such as putting plans into action, physician engagement, operation readiness, payer partnership, and ensuring the success of the program (Press, Rajkumar & Conway, 2016).
Implementing a bundled payment program requires participation and coordination of all the stakeholders involved such as the payers, hospital and the physicians (Rosen et al., 2013). Each of the named groups has distinct role to play in the implementation of the program. The health care service providers and the physicians should highly be engaged with the aim of ensuring buy-in. On the other hand, the hospital as another stakeholder should ensure that the operations of the hospital both financial and clinical are effective. To create attractive financial incentives the physician groups, hospitals and payers need to partner. The major component for ensuring the success of the bundled payment is ensuring consistent and active physician engagement (Miller et al. 2017). This is mainly because physicians are in most cases are resistant in placing any amount of payment at risk. As such, convincing the physicians is necessary for ensuring the successful implementation of the policy. Furthermore, the physicians play several roles in the implementation of the policy hence a need of actively engaging them. Among some of the forms of physician, leadership includes identifying and ensuring the necessary protocols are followed in making changes necessary in patient care (Froimson et al., 2013). The physicians are also involved in participating in the different development process while adhering to the agreement terms. Physicians play a role in reducing unwarranted variation through encouraging the colleagues. The physicians’ engagement needs a planning group to ensure the successful implementation of the program. As such, the planning group should show the value and impact into not only the patients but also the providers. Besides, the group should be able to demonstrate transparency in actualizing the proposed terms. To ensure active physician participation, there is a necessity of creating financial incentives which are normally in the form of different performance payments which are from the incentive pool. However, the reimbursement of the physicians and the time under the episode payment program form a market value issue.
A successful payment bundle policy does not only rely on the physicians’ engagement but also according to how the financial funds flow (Rosen et al., 2013). The responsibility of overseeing the effective financial funds flow is assigned to the hospital staff. To ensure that there are no cost overruns and that there are no negative fiscal outcomes, it is necessary for the hospital to follow the financial funds flow and keep track of the patients in the payments bundle. The bundled payment policies which run effectively are as a result of transparency portrayed in the system and the consistency of sharing necessary and reliable data between the physicians and the hospital. The importance of sharing the data between the physicians and the hospitals include ensuring high-quality patient care and ensuring consistency. Similarly, it is important in avoiding any queries that may be related to the validity of the bundled payment program. One of the critical steps to take in the predicting the future success of the bundled payment program is to conduct an assessment which evaluates the ability of the organization to operate under the bundled program (Miller, et al. 2017). The relevance of assessing the bundled payment program is portrayed in the identification of different changes such as patient education protocols, revision of the patient care plans and updates of the technology system.
The process of conducting assessment and processing the payment bundle can occur for several months, but this depends on the different changes involved (Ferrari et al., 2014). The last phase necessary in the implementation of the bundled payment program is creating a partnership with the payer. The payer can be a government payer, self-insured employer or commercial health plan. Among these payers, the commercial payers are more flexible and seek more financial cost which demonstrates the quality and value to the customers (Ferrari et al., 2014). For successful bundle policy, the payers’ partners should engage in discussions which offer suggestion and insights aimed at creating a bundled offer that is sustainable and attractive in the market. As such, the partnership in the implementation of the bundled program includes different contracts such as the excluded procedures in the program and the level of service quality (Froimson et al., 2013).
The contracts should also include the financial terms such as the quality of incentives and should also propose the funds flow which include both the hospital and physicians participants. One of the contract’s term that in most cases become challenging to come to a common agreement between the involved stakeholders is the payment model approach. According to the Class Materials, the government has different implications towards the factors that drive the management of the providers when implementing the bundled program. Consistency is the key to the success of the program whereby the organizations should not be involved in any direct conflict with the set policy objectives. The involved stakeholders should also portray competence by effectively reacting to the signals received (Class Materials).
Different factors in the health care system are linked together through the different payment processes. As such, the purchasers, patients, insurers, health care providers and health plans are all connected through the financial instructions given (Ferrari et al., 2014). The funders and purchasers of the health care domain include both the private and public purchasers. They include the state and local governments, employers, families, individual consumers and the federal government (Rosen et al., 2013). The covered populations and employees in most cases are covered by the contractual agreements which are made with the insurers and the health plans. The linkage between providers and purchasers may be through direct links between the employers’ contract and the provider group.
Another form of linkage between the different types of providers includes payments. As such, the individual physicians may be linked through the way they receive their payment such as through the larger medical group. Similarly, physicians and hospitals may be linked through shared risk arrangements which form a financial linkage (Press, Rajkumar & Conway, 2016). It is evident that the bundled payment leads to various linkages within the involved organizations which include both diverse and complex linkages. These linkages in turn influence the management of the involved organizations. The bundled payment policy can have a great impact on the way the different services are provided to both the patients and the consumers. Therefore, it interrupts with the management hence at some point, it may produce unintended consequences.
The management of most of the involved organizations such as hospitals and other facilities in distinct settings are mostly managed by committees. The committee is thus entitled to the role of understanding the consumer decision and how it affects the payment relationship (Ferrari et al., 2014). The management through the committee in most cases believe that patients and consumers should play the role of rewarding quality care. However, this can only be guaranteed if the management gives the consumers choices and the necessary information while allowing the consumers to exercise the powers of acting on those choices. The health plans are not common to all consumers. Therefore, all consumers have a choice of the services given, but not all consumers have the necessary health plans. Consumers rarely change the health plans mainly because of the little information available to these consumers at the level of providers (Miller et al. 2017). They stick to the health plans also because of quality reasons.
One of the medical fields that the bundled payment can express positive result is the cardiovascular care arena. As such, the implementation of this policy can be easily visible and more impactful. Cardiovascular diseases ought to have a national discussion as a way of positively creating the health care reforms (Ferrari et al., 2014). This is because cardiovascular diseases are the main cause of increased mortality cases. The diseases are costly, common and deadly. Besides, treating of these diseases needs seeking medical services from different providers in different disciplines. This includes radiology, cardiology, primary care, anesthesiology and cardiac surgery (Go et al., 2014). In addition to visiting such multiple providers, the cardiovascular patients seek medical care from different health care facilities. Such facilities include outpatient primary care, skilled nursing facility, hospital, and subspecialty clinics. Based on these factors, bundled payments remain as the ideal option for generating savings for the cardiovascular care and improving the care coordination. Ferrari et al. (2014) assert that other possible impacts of bundled payment in the cardiovascular diseases domain include decreased spending, reducing costs, elimination of unnecessary services, and create incentives for the provider.
One of the impacts of the bundled payment is to create incentives and eliminate the unnecessary spending (Bozic et al., 2014). This is made possible through the bundled payment approach whereby the different providers involved are paid a single sum of money rather each of the provider receiving individual payment. The different providers in the cardio vascular domain are reimbursed once hence catering for all the expenses experienced in the different facilities and disciplines involved in treating these diseases. Some of the mechanisms under the bundled payment that are intended at decreasing the spending include reduction of post-discharge costs, avoiding readmissions in the hospitals and being cautious on the use of resources during the patients’ stay in the hospital (Rosen et al., 2013). The consequence of the bundled payment based on reducing the reimbursement can be the reduction of both unnecessary and necessary care. Therefore, it is important to oversee that the reduction of the spending in the cardiovascular treatment unit goes hand in hand with the maintenance of quality care.
Saving which is another impact of the bundled payment policy depends on the design of the payment system. Rosen et al. (2013) assert that the bundled payments are based on the average cost of the episode. To ensure that the payments to be made are fair, it is necessary to make adjustments based on the patient severity (Bozic et al., 2014). In case the bundled payment does not take into account the severity of the patients’ disease, the providers may not want to be involved in taking care of the patients as a way of evading the risk of financial losses. There are some conditions which the bundle payment system may not be easy to implement. Such an example include most chronic diseases such as diabetes. Diseases that may have an approximate time for treatment such as those with clear begin and end dates can be easily included in the bundled payment system (Bozic et al., 2014). The cardiovascular diseases do not lie under this bracket hence there is a need for a strategy of coming up with a way of reducing the spending.
The decision of implementing the bundled payment program will be highly supported by most of the stakeholders. Some of the diseases such as cardiovascular diseases raise national concern hence the only possible way of dealing with such a menace is through implementing the program. As such, it will not only be beneficial to the employees but also to the patients. While it reduces the expenses of the funds to be paid by the patients, it eliminates the possibility of financial loss that is depicted through other traditional payment methods (Press, Rajkumar & Conway, 2016; Bozic et al., 2014). An instance in cardiovascular diseases is where the patient may be admitted to the nursing care unit where the finances set for the treatment purpose depreciate before the patient proceeds to the next facility or discipline. Due to lack of funds, the patients may succumb to the disease since they lack the finances necessary for catering for the health care services needed. The decision of implementing the policy cannot be easily embraced by all the stakeholders since some businesses are driven by their personal agenda. Therefore, the magnitude of incorporating the policy into the public health system may be slow since it is a gradual process. As such, there is a need of corporation and financial support which can only be solved through the engaging in the bundled payment.
Conclusion
In essence, bundled payment is a good strategy for matching the high economy hence it helps both the patients and consumers acquire quality services while at the same time cutting on the cost expenses. The impact of embracing the bundled payment is felt all over the medical units such as the cardiovascular diseases unit where high mortality cases have been reported. The future of effective medical health lies in improving the services while at the same time offering cost friendly services. Therefore, bundled payment lies as the only hope for cost effective and improved medical care in future.
References
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