CEO SUMMARY: For decades, hospitals were reluctant to allow any outside lab company to run their inpatient lab operations because they preferred to maintain control over quality results and turnaround times. That attitude may be changing as health systems face increasing margin compression by moving to value-based reimbursement models and taking on more risk-based contracts.
Tag: Bundled paymentSkip to articles
Bundled payment, also known as episode-based payment, episode payment, episode-of-care payment, case rate, evidence-based case rate, global bundled payment, global payment, package pricing, or packaged pricing, is defined as the reimbursement of health care providers (such as hospitals and physicians) “on the basis of expected costs for clinically-defined episodes of care.” It has been described as “a middle ground” between fee-for-service reimbursement (in which providers are paid for each service rendered to a patient) and capitation (in which providers are paid a “lump sum” per patient regardless of how many services the patient receives).
Advocates of bundled payments note that unlike fee-for-service, bundled payment discourages unnecessary care, encourages coordination across providers, and potentially improves quality. Unlike capitation, bundled payment does not penalize providers for caring for sicker patients. Bundling payment provides additional advantages to providers and patients alike, through removing inefficiency and redundancy from patient-care protocols; e.g. duplicate testing, delivering unnecessary care, and failing to adequately provide postoperative care.
This method of payment is also said to provide transparency for consumers by fixing pricing and publishing cost and outcomes data. Patients would be able to choose a provider based on a comparison of real data, not word of mouth. Bundled payments may also encourage economies of scale – especially if providers agree to use a single product or type of medical supply – as hospitals or integrated health systems can often negotiate better prices if they purchase supplies in bulk.
On the other hand, the scientific evidence in support of it has been described as “scant.” It does not discourage unnecessary episodes of care; for example, physicians might hospitalize some patients unnecessarily.
Providers may seek to maximize profit by avoiding patients for whom reimbursement may be inadequate (e.g., patients who do not take their drugs as prescribed), by overstating the severity of an illness, by giving the lowest level of service possible, by not diagnosing complications of a treatment before the end date of the bundled payment, or by delaying post-hospital care until after the end date of the bundled payment.
Meanwhile, early evidence indicates that Medicare’s bundled-payment pilot, the Bundled Payment Care Initiative, has helped participating providers improve the quality of care while better managing healthcare costs. Should more detailed findings confirm these outcomes, Medicare could decide to expand the range of clinical services it wants covered by a bundled-payment arrangement.
CEO SUMMARY: Over the next 24 months, it will be essential for every clinical laboratory and anatomic pathology group to develop clinical and financial strategies that meet the changing needs of health insurers, hospitals and health systems, physicians, and patients. THE DARK REPORT provides its assessment of key macro trends for 2016, along with comments
CEO SUMMARY: Across the nation, labs in hospitals and health systems are feeling pressure from shrinking lab budgets and the need to be a contributor to the integration of clinical care. At Henry Ford Health System in Detroit, the clinical laboratory and department of pathology have responded to these trends by identifying 10 ways to
Last month, TriCore Reference Laboratories of Albuquerque, New Mexico, announced that it had purchased the Rhodes Group, of Vernon, Connecticut. Rhodes Group provides data integration services for labs and other healthcare providers. TriCore had long been a customer of Rhodes Group. TriCore is pursuing a strategy of leveraging lab test data with other clinical and healthcare data.
CEO SUMMARY: One stark difference between the presentations delivered at last year’s Executive War College and this year’s presentations in New Orleans last week was near-unanimous recognition that the era of fee-for-service payment is soon to end! Speaker after speaker urged the audience to accept this marketplace reality. The common recommendation was for lab administrators and pathologists to take immediate steps to help their laboratories respond to this development in effective ways.
CEO SUMMARY: One stark difference between the presentations delivered at last year’s Executive War College and this year’s presentations in New Orleans last week was near-unanimous recognition that the era of fee-for-service payment is soon to end! Speaker after speaker urged the audience to accept this marketplace reality in laboratory industry trends. The common recommendation
CEO SUMMARY: From the launch in 2013 of a big accountable care organization in Wisconsin, the North Shore Pathologists at Columbia-St. Mary’s Hospital have been involved. Among the lessons learned are the importance of structuring the pathology contract with the hospital to anticipate value-based reimbursement and having full access to the ACO’s data. The pathologists are using this data to develop test utilization programs that help physicians order the right lab test for the right patient.
In the Protecting Access to Medicare Act of 2014 (PAMA), the Center for Medicare and Medicaid Services (CMA) is directed to collect market price data and use the data to establish prices for the Part B Clinical Laboratory Fee Schedule, starting on January 1, 2017.
CEO SUMMARY: Under the Protecting Access to Medicare Act, CMS must collect market price and volume data from certain labs beginning January 1, 2016. CMS will use this data to establish Part B clinical laboratory fees beginning in 2017. One lab association representing community and regional laboratories points out that CMS has complex issues that must be appropriately addressed if the resulting rules are to avoid favoring some types of labs over others, whether intentional or not.
CEO SUMMARY: Will 2015 turn out to be a watershed year for the clinical laboratory industry? Not only are two federal agencies pushing forward with initiatives that will touch nearly every medical lab in the United States in the next 12 months, but other equally powerful trends continue to negatively influence the prices labs are paid for their testing services. All these factors make it essential for lab administrators and pathologist business leaders to work proactively to maintain their lab’s financial stability.