1. Bundled Episode Payment and Gainsharing Demonstration Project Weslie Kary, MPP, MPH Program Director Integrated Healthcare Association Agency for Healthcare Research and Quality 2010 Annual Meeting September 27, 2010

2. Overview What is bundled or “episode” payment? Why do it? IHA bundled episode and gain-sharing demonstration and evaluation plan 2

3. What is bundled (episode) payment? A single prospective price for all services needed by the patient over an episode of care. Defined on parameters of time and services. 3 Source: Center for Healthcare Quality and Payment Reform, Transitioning to Episode-Based Payment (http://www.chqpr.org)http://www.chqpr.org

4. Why bundle? Problems with current payment options… Fee for service: rewards volume of services, not appropriateness or coordination of care. Global capitation: shifts too much risk to providers, creates incentive for risk selection. Pay-for-performance: when framed as quality bonus, does not move enough money. Is bundled payment a workable compromise? 4

5. Some people think so… 5 CMS ACE Demonstration Geisinger ProvenCare TM Prometheus Payment TM PPACA… Expand ACE Demo, include post-acute care by 2013 Demonstrate in Medicaid population by 2012 Bundle payments in ACO

6. IHA Demonstration Project Focus: Major procedures and acute conditions, orthopedic first  cardiac and other. First participants: Monarch HealthCare, Cedars- Sinai, Hoag Hospital, Saddleback Memorial, Tenet, UCLA, Aetna, Blue Shield, CIGNA, HealthNet  all California. First populations: Commercial PPO  HMO, Medicaid Managed Care and Medicare Advantage. Episode definition: Date of surgery + 90 days, includes acute and routine follow-up, complications within 90-days, related readmits. 6

7. Demonstration evaluation What happened? Was model scalable? What facilitates success, what bodes failure? (RAND: Susan Ridgely, Peter Hussey) Was quality of care for orthopedic patients maintained compared to control hospitals? (U.C. San Francisco: Kevin Bozic, Steve Takemoto) Did efficiency go up, costs of care go down compared to baseline period? (U.C. Berkeley: James Robinson, Samuel Tseng) More info: http://www.iha.orghttp://www.iha.org 7