California hospitals to begin bundled-payment demo

Seeking to find the nexus between improving patient outcomes and reducing costs, the Patient Protection and Affordable Care Act requires that the Department of Health and Human Services establish Medicaid bundled-payment demonstration projects for episodes of care that include hospitalizations in 2012. The act also calls for the establishment of a national Medicare bundled-payment pilot program in 2013 for acute inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care that includes three days prehospitalization and 30 days posthospitalization.

So it's no wonder that bundled payments, aka episode payments, are attracting a lot of attention. This August, Los Angeles-based hospitals Cedars-Sinai Medical Center and UCLA Health System will join Hoag Memorial Hospital Presbyterian in Newport Beach, Calif., as participants in a bundled episode-of-care pilot for hip and knee replacements created by the Integrated Healthcare Association in Oakland, Calif., reports the Los Angeles Times.

The impetus of the pilot is to give hospitals and physicians the incentive "to sit down together to figure out the best way to care for their patients," Integrated Healthcare's Weslie Kary tells the Times. The charges that will be included in the pilot haven't been finalized, but should cover most medical treatments from surgery through the following 90 days for commercially insured patients, says Kary. The lump-sum payments will be negotiated individually by each participating hospital. To date, four California health insurers have agreed to participate: Aetna, Blue Shield of California, Cigna and HealthNet.

The Centers for Medicare and Medicaid Services has similar Medicare Acute Care Episode (ACE) bundled-payment demonstrations under way in Colorado, New Mexico, Oklahoma and Texas. The ACE demonstrations include 28 cardiac and nine orthopedic inpatient surgical services and procedures.

To learn more:
- read this Los Angeles Times article
- visit the IHA website
- read this CMS press release on the ACE demonstration
- view the Kaiser Family Foundation's health reform implementation timeline

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