Aligning Reimbursement with Value

Bundled payment in health care is the simplest and most effective way to pay for the best results. Most clinicians agree that a value-based payment that rewards good outcomes is far preferable to our current fee-for-service reimbursement that rewards the volume of services instead of value, and has been a major contributor to the relentless rise of health care costs. Fee-for-service also reinforces fragmented care through linking payment to specialties and specific interventions. Global provider budgets and capitation, are also poorly aligned with value for patients by decoupling payment from patients’ particular condition and care process.  The two emerging models for value-based payment are capitation, used in ACOs and provide a single payment for overall care of a patient, and bundled payment that represent a risk adjusted payment for a full set of services over the cycle of care for a condition.

We believe that bundled payments by condition are directly aligned with value for patients, and are the best way to pay for care. Bundled payments are risk adjusted single payments covering the full cycle of care for a condition from diagnosis through rehabilitation. The payment is contingent on achieving good outcomes, and allow providers to directly benefit by improving efficiency. Early evidence suggests that bundled payments lead to both outcomes and cost improvement. In addition to CMS bundles, pilot programs with insurers such as UnitedHealthcare and with employers such as Walmart, are creating opportunities for both providers and payers to create appropriate pricing and incentivizes prior to enabling broader rollout. Proper costing is integral to reaping cost savings, and outcome measures are also integral to aligning reimbursement and value. IT systems that capture both costs and outcomes over the care cycle are essential to modeling bundled payments and estimating costs for purpose of price setting.

IT solutions are needed to manage the billing and claims management cycles involved in bundled payments, for both providers and payers. Current billing systems require bundled payments claims to be manually separated from fee-for-service claims and submitted in a separate process, leading to inefficiency and lengthier times to payment.  Once IT systems can support bundled reimbursement, sending a single bill and processing a single claim will dramatically reduce the administrative costs of fee-for-service billing.  

Billing systems of the future will identify patients that are covered by a bundle versus fee-for-service claims or capitation. Bundled payments claims, involving a single price and a small number of contingencies, will be submitted separately by provider to the payer together with accompanying information specified in the contract. For payers, IT solutions for bundled payment claims processing will enable the far lower administrative costs, and ensure transparency and immediate payment once care is completed.

Finally, additional benefit of bundled reimbursement is simplification of the documentation burden facing clinicians. Currently, much documentation is designed to insure maximum fee-for- service reimbursement. With bundled reimbursement, physician documentation will focus on conveying the critical information about a patient’s care for the condition needed by other providers for care continuity.