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Lowering the Cost of Health Care

New payment models promote cost-effective sites of service and patient choice BY SAHELY MUKERJI


s the US health care system con- tinues to look for ways to provide better patient care at a lower price, insurers are exploring innovative pay- ment policies.

Bundled Payments One such policy that has received a lot of attention recently is bundled payments. “Given the recent finalization by the Centers for Medicare & Medicaid Ser- vice (CMS) of the Comprehensive Care for Joint Replacement (CCJR) rule, it is becoming clear that CMS is serious in its efforts to decrease a reliance on fee- for-service through the use of bundled payments,” says Brian Croegaert, senior vice president of Managed Care at Arca- dia Healthcare Solutions in Rockford, Illinois. “Beginning in April 2016, 67 health care market areas will find them- selves under a mandatory bundled pay-


ment process for certain joint replace- ment procedures.” Whether this particular CMS bun-

dled payment opportunity will be ben- eficial for the ASC community is yet to be determined, but either way, it rep- resents a significant shift in the way ASCs will be reimbursed, he says. To be successful, ASCs would need to understand the motives of the contract sponsors, Croegaert explains. “Medicare’s model is a retrospective payment comparing the final costs of the service bundle with a predeter- mined budget. If costs are less than the budget target, the remaining pay- ment can be shared with the bundle partners. Costs in excess of the bud- get will require the ASC to write a check to Medicare for the difference. It is important to note that at this stage Medicare’s payment is aimed at forcing lower payments to provider

facilities. Commercial insurance or employer-funded bundled payments on the other hand are much more likely to look for non-hospital-based facilities such as ASCs to anchor their bundled payment initiatives and meet cost-savings objectives.” To enhance their payer contract-

ing strategy, Croegaert adds, ASCs need to further understand Medicare’s proposed bundled payment models. The key value for an insurance com- pany or employer is that an ASC has lower overhead than a hospital, thus, it is more competitive. Equally or more important to a successful contract is an ASC’s ability to offer a “package” or “bundle” that includes its relationships with physicians, ancillary service pro- viders and other value added services, he says. “The plan sponsor will react most favorably to a well-developed package of services.

“While Medicare and Medicaid

will move slowly to the bundled ser- vice model, commercial and employer payers are much more open to contract

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