Article | March 22, 2022

Managed Care Strategies: Bundled Payments

The Concern

Bundled payments have been proposed in the health care reform debate as a strategy for reducing costs. By encouraging standards of care, bundled payments have proven to not only reduce costs but they have also decreased patient mortality. The challenge with bundled payments has been in the negotiation and implementation.

Medicare is currently conducting its Medicare Acute Care Episode (ACE) demonstration project for bundling payments for certain cardiovascular and orthopedic procedures. Medicare plans are to begin mandated bundled payment demonstrations by 2012 with implementation by 2018. Many payers are already negotiating bundled payments. Are you ready?

Bundled payments raise many concerns: How will you manage the risk? Do you have the information you need? How do you legally share any savings/loss with physicians? Can you implement a bundled payment contract? Can you adjudicate claims? Should you use a third party administrator (TPA)? Having a working knowledge of these complex issues can be overwhelming for the hospital CFO.

Hospital executives must ask themselves the following questions: Do we have enough knowledge and information to effectively negotiate bundled payment arrangements with third party payers? Do we know the “what” and “why” of implementing a bundled payment contract? Do we have qualified staff to carry out the bundled payment contracting functions or should we outsource the contracting functions?

KOHLER HealthCare Consulting can help you by:

  • Evaluating the managed care market in your service area.
  • Creating an understanding of how bundled payment contracts work; what is required by the payers; and establishing how the physician reimbursement model will be structured.
  • Providing an analytical tool to evaluate bundled payment contracts.
  • Identifying and minimizing the operational issues.
  • Providing the necessary training for your staff.
  • Establishing internal mechanisms to report and control payer problems.
  • Providing ongoing support for third party payer issues.