Everything You Need to Know About the Bundled Payments for Care Improvement Initiative

The ABCs of $$$s

Hospitalists whoaren’t in leadership, administrative or committee positions may not be familiar with the latest round of alphabet soup that is tied to payment reform and Medicare’s announced push to have 50% of its payments not by fee-for-service by 2018. Here are the most important ones:

• APM: Alternative payment models. The catch-all phrase for a variety of programs and initiatives that are outside the traditional fee-for-service model.
• MACRA: Medicare Access & CHIP Reauthorization Act of 2015. The act ended the hated sustainable growth rate (SGR) formula and combined CMS’s existing quality reporting programs under one system.
• MIPS: Merit-Based Incentive Payment System. The new program combines parts of the Physician Quality Reporting System (PQRS), the value modifier (VM, or value-based payment modifier/VBPM), and the Medicare electronic health record (EHR) incentive program into a single program.

Source: Centers for Medicare & Medicaid Services

—By Richard Quinn

Will Payment Reform Lead to Consolidation?

Bundled payments could create a scenario where hospitals or hospitalist management companies look to buy firms that provide post-acute care , says immediate past SHM President Robert Harrington Jr., MD, SFHM.

Dr. Harrington says that as healthcare reimbursement irrevocably moves to a system where an episode of care covers everything from admission to three months post-discharge, that major healthcare providers will be incentivized to coordinate care more effectively. Owning more services along the continuum makes that easier.

“As hospitalists or post-acute-care providers, [we] have to face that build versus buy versus partner decision across that continuum of care,” says Dr. Harrington, chief medical officer at Reliant Post-Acute Care Solutions in Atlanta. “Either we build a system that we then own and operate that encompasses the entire continuum of care…or we potentially partner with others out there but we lose a little bit of the element of control when we partner with people.”

The issue of who controls the system may still be a few years off, says John Nelson, MD, MHM, a principal in Nelson Flores Hospital Medicine Consultants. But he says that smart healthcare executives have already looked at buying opportunities.

Take Sounds Physicians’ acquisition at year-end 2014 of Cogent Healthcare, a deal that Reuters estimated the sales price to be $375 million. The deal created the largest hospitalist companies in the country, but one of the one of the sale’s highlights was the immediate ability to expand Sound’s post-acute-care programs to hospitals where Cogent already had a presence.

“Say Sound had decided not to [deal], well in five years from now everybody would be doing bundled payments and Sound would not have as a unique thing to offer,” Dr. Nelson says.

Dr. Harrington says he wouldn’t be surprised to see more consolidation of firms.

“I could absolutely see more of those groups potentially bringing under their umbrella other potential service lines throughout the continuum of care,” he adds. “So would it surprise me if TeamHealth [Holdings] went out and bought a large home health company? No, it wouldn’t. Does it surprise me that TeamHealth and IPC Healthcare merged for those reasons? Absolutely not. The success of folks in this new environment is going to be dependent on their ability to control the healthcare dollar, and the more services you have throughout that continuum, the better your ability to control that healthcare dollar.”

—Richard Quinn