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University to Pilot Medicare Bundled Payments for Heart Failure Patients

Three University of Colorado health care partners - University Physicians, Inc., University of Colorado Hospital, and the University of Colorado School of Medicine - are working with the Center for Medicare and Medicaid Innovation (CMMI) to launch a congestive heart failure (CHF) bundled payment pilot. The three-year program incentivizes low cost, high quality care by issuing a one-time, all-inclusive payment for Medicare heart failure patients.

Under the new bundled payment arrangement, scheduled to launch in earnest July 1, 2013, the partners will receive a single pre-determined payment for Medicare heart failure patients admitted to the hospital. Unlike traditional Medicare fee for service (FFS) where hospitals and physicians are paid per stay or per visit, the single bundled payment must suffice to cover all episode related health care costs, (some services are excluded), incurred for the patient during the initial hospital stay and 30 days post-discharge. Additionally the bundled payment price is a discount from historical Medicare FFS payment for CHF.

The finite amount of reimbursement puts the risk, and potential reward, on the hospital and physicians and encourages them to coordinate care and follow care guidelines so things like costly readmissions don’t occur within the first month. If the partners are successful in reducing costs for their patients, they stand to share in the savings. If total costs land higher than the bundled price, the partners are responsible for covering excess costs. CMMI requires that quality outcomes are demonstrated prior to sharing any of the savings with providers to mitigate the potential risk of patients receiving less care than is recommended as a cost-reduction strategy.

“In order to receive any financial benefit from realized cost savings, our providers must hit quality targets we have proposed including nationally recognized guidelines such as Hospital to Home and the Institute for Healthcare Improvement (IHI),” said Elizabeth D. Kissick, Director, Health Plan Development at University Physicians, Inc., the physician group partner in the pilot.

Unlike some of the other bundled payment options available, such as joint replacement, the CHF bundle isn’t largely a “trim the fat” approach, says Kissick. With surgical bundles, for example, facilities and providers can quickly cut costs off the top by negotiating better rates with device manufacturers. Kissick says managing costs for heart failure patients is more complicated because it takes a multi-pronged approach of patient risk stratification, physician engagement, adherence to guidelines, and patient empowerment.

“Our providers use data to identify and flag all high-risk CHF patients, and make sure every patient receives appropriate education and follow-up care to keep them at home and as healthy as possible,” explained Kissick. The partners utilize guidelines for care pathways in and outside the hospital stay. A combination of follow-up initiatives will include post hospital discharge phone calls and may include some type of telehealth or in home patient contact.

After analyzing their Medicare data, the partners identified that readmissions only occurred within the top quartile (based on cost) of Medicare patients. “Getting a chance to evaluate our data, see the risk stratification and care patterns outside of the University system was critical learning for us,” Kissick explained. “Without holistic data from Medicare, we were unable to identify what was happening to our patients outside our network and the opportunities to better manage their care.”

Approximately 100 Medicare patients will be covered under the bundled payment pilot program, although the partners will continue to provide care management and adhere to guidelines for all CHF, regardless of payer type. Medicare beneficiaries will be notified that they are included in the bundled payment pilot, and they can opt out of the program if they choose. Patients will be encouraged to remain in the University system during of their care management period; however, if for some reason the patient goes to another hospital, the partners will remain responsible for the cost of care incurred elsewhere under the bundle arrangement.

CMMI received approximately 2,000 applications for bundled payments nationwide. Kissick estimates about 10% were awarded pilots, although CMMI has yet to officially announce all awardees. One reason their application may have stood out among the thousands, Kissick says, is the strong clinical champion leadership present at each partner organization and that the partners have been vested in CHF guidelines and readmissions projects for several years.

For more information about the CMMI bundled payment pilot, click here.

For more information about the University bundled payment pilot, contact Elizabeth Kissick at