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related to either a particular person or a particular diagnosis or procedure.


“Under episodic bundling, a provider or group of providers receives a single payment per person and health event (e.g., hip fracture or knee replacement), with payment adjusted for the severity of the pre- senting patient’s condition. Episodic bundling may include a wide range of providers and services – for example, hospitals, physicians, physical therapists and long-term care facilities – it typically focuses on hospital and physician care along with some ancillary services.”


There are organizations out there that are eager to take on risk, but they are finding that the admin- istrative and revenue cycle processes necessary for success differ from their historical fee-for-service arrangements. Is it that their current systems and processes don’t have the technical capabilities to execute these payments? In some cases, the answer may be yes, but there are systems out there that do support these capabilities. The key here is deciding how you plan to use episodic bundling and making sure you have the right process, people and systems in place to execute effectively. Here are a few crucial steps we recommend provider organizations take in order to ensure success when exploring bundled and episodic payments: • Make sure you are considering the billing process. What are the penalties if you double-dip? What pro- cesses and systems can you put in place to identify charges included in the bundle? Can this process be automated?


• How will you distribute the payments? What systems can you put in place to help pay (bonus structures, withholds, capitation) with the account- ability theme? If you are paying your providers fee for service, how can you incent them to control cost and quality?


• Will your episodes be confined to your door or extend beyond them? This becomes especially im- portant in an accountability model. The questions about incenting providers become more interesting if the providers you are incenting are outside your organization.


• What level of flexibility should you adopt to help keep the doors open to new, different and financial- ly beneficial payment contracts and models? Will your revenue cycle system support the models?


• How will you use the bundles to understand varia- tion in care across your patient population? What data will you use to understand variation, and what systems will aggregate both codified clinical data and the cost of the aggregate charges? Revenue cycle would be a good place to start.


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• Look for best practices and understand where there is under- and over-utilization. We can’t look at the gate-keeper models of capitation – since the incen- tive is on quality and efficiency, under-utilization will add to cost in the long run.


No one knows what the future holds, but we believe that, over the next fi ve years, revenue cycle and episodic payments will rule the accountable care headlines.


As providers consider these important issues, flex- ible and robust revenue cycle technology will become a requirement for successful healthcare organizations that want to provide quality care, stay profitable and stay in business.


No one knows what the future holds, but we be- lieve that, over the next five years, revenue cycle and episodic payments will rule the accountable care headlines. We are seeing a trend of an increasing number of healthcare executives who plan to be- come part of an accountable care organization. Given this, the need for strong revenue cycle management and management of episodic bundling are critical, including: • Having reimbursement directly linked to out- comes;


• Self-managing utilization in response to outcomes- based reimbursement;


• Referral and appointment management, patient experience;


• Distribution of shared savings; • Understanding which charges are reimbursed indi- vidually or part of a bundle;


• Becoming proactive in scheduling patients for ser- vices and alerting medical staff if appointments are missed; and


• Strong analytics. We have the utmost respect for healthcare financial


executives out there – they are playing a game of hot potato with various compliance initiatives while trying to stay profitable and provide the best care possible. We would love to hear from other provider organizations. Is your organization considering becoming an accountable care organization? Are you executing episodic payments today? How is your organization handling episodic and bundled payments? If you aren’t handling these pay- ments today, what plans, if any, do you have for the future?


HMT HEALTH MANAGEMENT TECHNOLOGY February 2012 27


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