Do HF Programs Make Sense Under a Bundled Payment System?
Background Policy makers have proposed bundling payments for all heart failure (HF) care within 30 days of an HF hospitalization in an effort to reduce costs. Disease management (DM) programs can reduce costly HF readmissions but have not been economically attractive for caregivers under existing fee-for-service payment. Whether a bundled payment approach can address the negative financial impact of DM programs is unknown.
Methods Our study determined the cost-neutral point for the typical DM program and examined whether published HF DM programs can be cost saving under bundled payment programs. We used a decision analytic model using data from retrospective cohort studies, meta-analyses, 5 randomized trials evaluating DM programs, and inpatient claims for all Medicare beneficiaries discharged with an HF diagnosis from 2001 to 2004. We determined the costs of DM programs and inpatient care over 30 and 180 days.
Results With a baseline readmission rate of 22.9%, the average cost for readmissions over 30 days was $2,272 per patient. Under base-case assumptions, a DM program that reduced readmissions by 21% would need to cost $477 per patient to be cost neutral. Among evaluated published DM programs, 2 of the 5 would increase provider costs (+$15 to $283 per patient), whereas 3 programs would be cost saving (−$241 to $347 per patient). If bundled payments were broadened to include care over 180 days, then program saving estimates would increase, ranging from $419 to $1,706 per patient.
Conclusions Proposed bundled payments for HF admissions provide hospitals with a potential financial incentive to implement DM programs that efficiently reduce readmissions.
Medicare's Hospital Insurance Trust Fund faces its greatest challenge in decades with economic projections now estimating insolvency by 2029. The recently passed Affordable Care Act arrives at this critical juncture, with several measures aimed at favorably bending the cost curve. One mechanism through which policy makers are addressing cost control is to "bundle payments" for a given episode of care. This strategy gives hospitals a fixed amount of money for treating a given condition for a defined period. In theory, bundled payment strategies could provide an incentive to improve care transitions and reduce downstream readmissions.
Currently, nearly 1 in 5 Medicare beneficiaries who are hospitalized will require readmission within 30 days; and unplanned rehospitalizations cost $17.4 billion per year. Heart failure (HF), the most common reason for hospital admission among elderly Americans, provides an ideal model for investigating whether proposed bundled payment strategies are likely to achieve their intended goals. In 2013, Medicare has proposed to pilot bundling HF payments for up to 30 days after discharge. Disease management (DM) has been advocated as an effective means of reducing all-cause readmissions for HF, although this has been tempered by negative results of recent randomized trials. Disease management programs are multidisciplinary efforts to improve health through coordinated systems of care, delivery system support, support for patient self-care, identification of at-risk populations, and a continual feedback loop between patients and care providers. Successful DM programs have not gained a foothold in real-world practice, and this has been attributed partly to a lack of financial incentives to reduce rehospitalizations in a fee-for-service system.
What remains unknown is whether interventions that reduce readmissions within 30 days of discharge for patients with HF would yield net savings and, therefore, be financially attractive to hospitals under a bundled payment strategy. We used a decision analytic approach to evaluate whether a bundled payment strategy could make DM programs cost saving.
Abstract and Introduction
Abstract
Background Policy makers have proposed bundling payments for all heart failure (HF) care within 30 days of an HF hospitalization in an effort to reduce costs. Disease management (DM) programs can reduce costly HF readmissions but have not been economically attractive for caregivers under existing fee-for-service payment. Whether a bundled payment approach can address the negative financial impact of DM programs is unknown.
Methods Our study determined the cost-neutral point for the typical DM program and examined whether published HF DM programs can be cost saving under bundled payment programs. We used a decision analytic model using data from retrospective cohort studies, meta-analyses, 5 randomized trials evaluating DM programs, and inpatient claims for all Medicare beneficiaries discharged with an HF diagnosis from 2001 to 2004. We determined the costs of DM programs and inpatient care over 30 and 180 days.
Results With a baseline readmission rate of 22.9%, the average cost for readmissions over 30 days was $2,272 per patient. Under base-case assumptions, a DM program that reduced readmissions by 21% would need to cost $477 per patient to be cost neutral. Among evaluated published DM programs, 2 of the 5 would increase provider costs (+$15 to $283 per patient), whereas 3 programs would be cost saving (−$241 to $347 per patient). If bundled payments were broadened to include care over 180 days, then program saving estimates would increase, ranging from $419 to $1,706 per patient.
Conclusions Proposed bundled payments for HF admissions provide hospitals with a potential financial incentive to implement DM programs that efficiently reduce readmissions.
Introduction
Medicare's Hospital Insurance Trust Fund faces its greatest challenge in decades with economic projections now estimating insolvency by 2029. The recently passed Affordable Care Act arrives at this critical juncture, with several measures aimed at favorably bending the cost curve. One mechanism through which policy makers are addressing cost control is to "bundle payments" for a given episode of care. This strategy gives hospitals a fixed amount of money for treating a given condition for a defined period. In theory, bundled payment strategies could provide an incentive to improve care transitions and reduce downstream readmissions.
Currently, nearly 1 in 5 Medicare beneficiaries who are hospitalized will require readmission within 30 days; and unplanned rehospitalizations cost $17.4 billion per year. Heart failure (HF), the most common reason for hospital admission among elderly Americans, provides an ideal model for investigating whether proposed bundled payment strategies are likely to achieve their intended goals. In 2013, Medicare has proposed to pilot bundling HF payments for up to 30 days after discharge. Disease management (DM) has been advocated as an effective means of reducing all-cause readmissions for HF, although this has been tempered by negative results of recent randomized trials. Disease management programs are multidisciplinary efforts to improve health through coordinated systems of care, delivery system support, support for patient self-care, identification of at-risk populations, and a continual feedback loop between patients and care providers. Successful DM programs have not gained a foothold in real-world practice, and this has been attributed partly to a lack of financial incentives to reduce rehospitalizations in a fee-for-service system.
What remains unknown is whether interventions that reduce readmissions within 30 days of discharge for patients with HF would yield net savings and, therefore, be financially attractive to hospitals under a bundled payment strategy. We used a decision analytic approach to evaluate whether a bundled payment strategy could make DM programs cost saving.