Are home and community based services the key to profiting from bundled payments?

 Andrey Ostrovsky, M.D.
Andrey Ostrovsky, M.D.

Medicare is undergoing one of the largest transformations in history including changes in financial incentives that are driving providers from high-volume to high-quality care delivery. According to the U.S. Secretary of Health and Human Services, by 2018, over 50% of Medicare payments will be tied to value-based payment models like bundled payments. 

Bundled payments have evolved over the last 20 years from focusing on the hospital to post-acute care. A recent article in Annals of Long Term Care, explores how the newest incarnation of bundled payment creates an opportunity for providers to optimize profit margins and patient care by moving beyond post-acute care and engaging home and community-based providers.

The bundling of services originated in the early 1980s with the establishment of the Medicare prospective payment system, in which Medicare payment was based on a predetermined, fixed amount for a bundle of services regardless of the actual costs incurred. The PPS started in the hospital and was replaced by several similar iterations that included post-acute care. The most recent versions of bundles are the Bundled Payments for Care Improvement initiative and the mandated joint replacement bundle.

Bundled services were first characterized as Diagnosis-Related Groups (DRGs) for hospitals, then Resource Utilization Groups (RUGs) for SNFs, and most recently Home Health Resource Groups (HHRGs) for skilled home health agencies. (Figure 1)

Figure 1


Bundles in post-acute care have involved care transition models that are predominantly staffed by doctors and nurses, including the Care Transitions Intervention Model, the Transitional Care Model, Guided Care, and Geriatric Resources for Assessment and Care of Elders (GRACE). These programs have been shown to significantly reduce hospital readmissions.

However, a major barrier to the sustainability of traditional transitional care interventions is the cost to support nurse salaries and the growing nursing shortage in the US. Furthermore, a substantial proportion of health determinants are upstream of the typical scope of practice and time bandwidth of a nurse transition coach, necessitating care coordination or functional supports that would more appropriately fall in the domain of an HCBS provider's expertise and reimbursement.

One opportunity to overcome the threat to sustainability facing transitional care interventions is leveraging an existing, underutilized workforce of over 5 million frontline workers that provide HCBS to help the aging population maintain function and address non-medical health determinants in the community. Staff providing HCBS are generally less costly then medical staff. And, technology has emerged to maintain adequate clinical care management through nurse oversight of non-medical HCBS staff. Such technology-enabled transition models have been shown to achieve $9,056 in Medicare A savings per beneficiary per year (Avalere 2015), 39.6% reduction in readmissions & 257% ROI (AHRQ 2014), and the ability to predict admissions up to 120 days (PHIM 2015).

Conveniently, leveraging HCBS for bundles does not require additional infrastructure investment. Over 100 HCBS providers participated in the Community-based Care Transitions Program, many of whom still have the transitions staff and processes in place to serve hospitals and PAC providers participating in bundled payment reimbursement models.

Although limitations exist, incorporating HCBS into bundled services could the key for providers to optimize profit margin and the Triple Aim of improving outcomes, decreasing cost of care, and improving patient experience.

Andrey Ostrovsky, M.D., is the co-founder and CEO of Care at Hand. 

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