The cost of healthcare is a much-discussed and ongoing issue. The new article by William L. Matzner, MD reviews “Bundled Payment for Care Improvement Advanced”
The cost of healthcare continues to be a topic of intense discussion from kitchen tables, to board rooms, to congressional hearings. Spurred by conversations and allegations, insurance companies and entities such as Medicare and Medicaid have striven to conceive alternate payment approaches besides the traditional fee for service methods on the basis of reducing costs. Dr. William Matzner has published an overview article on this issue. The complete article will be published on the Blog of Dr. Matzner at https://drwilliammatzner.blogspot.com
Capitation (a system in which providers are given a defined sum per patient regardless of how many services are rendered in a defined period of time) has been around for many years and has been fraught with complaints among providers for inconsistencies between responsibility for and authority over patient interactions. The HMO model has also been attempted in various iterations with its focus on preventive care, but most have not survived, Kaiser Permanente being an exception. Medicare has since developed a method falling between that of full capitation and fee for service—the use of bundled payments or put more descriptively, episode-based payments. In this method, reimbursement of healthcare providers (both hospitals and physicians) is based on the expected costs for clinically defined episodes of care. Since 1984, bundling payment methods have been tried and as of 2012 almost one third of medical reimbursement is now from a bundling system.
In 2018, Medicare introduced a variation called Bundled Payment for Care Improvement Advanced (BPCI Advanced). In this model there are 48 episodes, 45 inpatient and three outpatient. Again there are four payment models, with model two being the most common. Several of the medical episodes included in BPCI Advanced include CHF, COPD, Sepsis, Acute MI and Pneumonia. As every physician would know, there is a wide variation in the degree of illness and the course of therapy within these diagnoses, and there is nothing uniform about each case.
For example, Sepsis includes three DRGs which range from uncomplicated to septic shock. Unlike elective surgery, providers cannot screen these patients to avoid complications, and in fact many of these patients develop complications and/or have significant comorbidities. All of these variables create significant variations of length in stay (LOS) and other costs associated with each hospitalization. In these cases, where there is a wide variation in costs, a need exists to employ a method to better predict these costs.
That methods exists but seems too seldom used. It is decision tree modeling that offers both the flexibility and complexity of interaction to more accurately predict costs than just a linear model which is commonly used. Since diseases such as sepsis, COPD and CHF can become a complex affair with many possible outcomes that would affect costs, this type of modeling lends itself to such an analysis. Armed with better predictability results, providers are better able to defend both real costs and to negotiate for more fairly applied payment schemes.
If your objective is to provide the best decision-making for your organization and take a global view of your business, expanding your sights beyond ROI, and educating other decision-makers, Cost Effectiveness Analysis can make your organization more competitive and more profitable.
William Matzner, MD. is a recognized expert in Healthcare and Neuro Economics. With a Ph.D. in Economics, MBA and Medical Doctor degree, Dr. William Matzner will provide you with expert analysis on health and wellness programming, populations health management, disease management, new program development, facility development, equipment acquisitions, and other healthcare programs, acquisitions and initiatives. For more information about cost effectiveness analysis and improved financial accountability for your organization, visit Dr. Matzner at http://healthcareanalytics.biz. Dr. Matzner is also available for speaking engagements, retreat presentations and topic specific addresses.
Consulting Website: https://healthcareanalytics.biz
If your objective is to provide the best decision-making for your organization and to take a global view of your business, expanding your sights beyond ROI, and educating other decision-makers, Cost Effectiveness Analysis can make your organization more competitive and more profitable.
Today, a simple return on investment, ROI, calculation will not provide needed nor valid insights. However, the use of cost-effectiveness analysis (CEA) would provide quite useful, valid and actionable information. CEA uses decision tree models to compare not only cost outcomes but effectiveness outcomes of various treatments on patient health and even on future healthcare usage based on various current actions. It can further be used to determine how effective a set amount of money spent on a particular treatment or method will impact outcomes (i.e. willingness to pay calculation). CEA models are flexible and can incorporate a wide variety of scenarios. As opposed to Big Data, CEA makes use of Broad Data so that comparisons of treatment modalities can be evaluated using real life outcomes. It can compare effects on a discrete problem such as a cancer tumor, or on chronic ongoing diseases such as COPD or CHF.
As the delivery of effective yet profitable, or at least cost effective, healthcare becomes more challenging, methods for evaluating treatments and programs become more necessary if not essential. Methods must be implemented to evaluate these new treatments and programs once they are in place so adjustments can be made. CEA enable organizations to both initially evaluate and subsequently monitor new methods and programs in a meaningful way. CEA can be used in revenue cycle decisions, health information technology, capital equipment acquisition, new treatment evaluation, disease management evaluation, utilization management, etc.
William Matzner, MD. is a recognized expert in Healthcare and Neuro Economics. With a Ph.D. in Economics, MBA and Medical Doctor degree, Dr. William Matzner will provide you with expert analysis on health and wellness programming, populations health management, disease management, new program development, facility development, equipment acquisitions, and other healthcare programs, acquisitions and initiatives. For more information about cost effectiveness analysis and improved financial accountability for your organization, visit Dr. Matzner at https://healthcareanalytics.biz
*** Dr. William Matzner works in the area of healthcare economics consulting at Healthcare Analytics, LLC, in California. He graduated Phi Beta Kappa from Stanford University. He received his M.D. with Honors from Baylor College of Medicine. In 1988, he was the Solomon Scholar for Resident Research at Cedar Sinai Medical Center. Dr. Matzner subsequently was awarded a PhD in Neuro Economics from Claremont Graduate University. He is board certified in Internal Medicine and Palliative Medicine. He has researched and published extensively on the issue of reproduction and immunology in medical literature. He has been in private practice since 1989, specializing in Reproductive Immunology and Internal medicine.
Consulting Website: http://healthcareanalytics.biz
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