Table Of ContentBundled Payments: An Overview of the
Antitrust, Regulatory, Contracting and
State Law Issues
Speakers from Davis Wright Tremaine, LLP
Robert G. Homchick
[email protected]
Lisa R. Hayward
[email protected]
Charles R. Wright
[email protected]
Bundled Payment Models
The term “bundled” describes a wide range of payment models. It often
The term “bundled” describes a wide range of payment models. It often
refers to a payment that encompasses more than one provider’s services
refers to a payment that encompasses more than one provider’s services
or an entire patient encounter, including global and packaged payments.
or an entire patient encounter, including global and packaged payments.
Hospital
Hospital
Outpatient
Outpatient
Physician
Physician
Global
SNF
SNF
Payment
Bundled NOTE: All covered services for a specific time period.
Payment
Particular Conditions
Particular Conditions
(e.g., diabetes)
Packaged (e.g., diabetes)
Payment
Particular Episodes of Treatment
Particular Episodes of Treatment
(e.g., cardiac surgery, including
(e.g., cardiac surgery, including
90 days of follow-up)
90 days of follow-up)
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Bundled Payments: Contract
Health Plan
Health Plan
Contract amendment - Contract amendment - look
Contract amendment - Contract amendment - look
outlines terms to hospital for payment
outlines terms to hospital for payment
Hospital or Group/IPA
Hospital or Group/IPA
New contract New contract
New contract New contract
Surgeon
Optional package services Surgeon
Optional package services Group/IPA or
(rehab or other) Group/IPA or
(rehab or other) Hospital
Hospital
New contract
New contract
Other MDs, PT
Other MDs, PT
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Bundled Payments: PHO
Health Plan
Health Plan
Global Contract -
Global Contract -
outlines terms
outlines terms
Physician
Physician
Hospital
Hospital
PHO contracts Organization
PHO contracts Organization
with Participating
with Participating
Providers
Providers
Surgeon
Surgeon
Group/IPA or
Group/IPA or
Hospital
Hospital Hospital
Hospital
Other MDs, PT
Other MDs, PT
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Bundled Payments
(cid:131) Pay for Performance
(e.g., quality, patient satisfaction, good
citizenship)
(cid:131) Pay for Savings
(sometimes to as “gainsharing;” e.g., cost
referred
savings, standardization, efficiency)
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Gainsharing
Hospital pays percentage of resulting savings to physicians
(cid:131) Product substitution - routine use of less costly agents,
medications, etc.
(cid:131) Product standardization - routine use of specified devices
and supplies, e.g., stents, catheters, diagnostic devices,
contrast agents, etc.
(cid:131) Elimination of routine use of specified products or services
(“use as needed”)
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And the law…
(cid:131) Physician Incentive Plan Law— “Gainsharing CMP”
(cid:131) Stark Law
(cid:131) Anti-Kickback Statute
(cid:131) State Law Restrictions
(cid:131) Corporate Practice of Medicine
(cid:131) Fee Splitting
(cid:131) Insurance/Risk Regulation
(cid:131) State Self-Referral and Kickback Statutes
(cid:131) Tax
(cid:131) Antitrust
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Gainsharing CMP: The Hospital
“PIP law”
(cid:131) Prohibits a hospital from knowingly paying, directly or indirectly, a
physian to reduce or limit services provided to Medicare or
Medicaid patients under the physician’s direct care
(cid:131) Penalty of $2,000 for each affected Medicare or Medicaid patient
(cid:131) Gainsharing CMP has been broadly interpreted by OIG—applies to
payments to induce reduction of medically unnecessary care
(cid:131) Payments to reduce costs have been equated with payments to
reduce care
(cid:131) HOWEVER: Gainsharing CMP applies only to Medicare and
Medicaid FFS
(cid:131) For managed care there is a separate PIP law that applies at the
health plan level
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Gainsharing - Regulatory Review
(cid:131) 1999 OIG Special Advisory Bulletin on Gainsharing
(cid:131) http://oig.hhs.gov/fraud/docs/alertsandbulletins/gainsh.ht
(cid:131) Effectively halted the development of gainsharing programs in the short run
(cid:131) In a series of subsequent Advisory Opinions the OIG identified the
characteristics of acceptable Gainsharing programs
(cid:131) Transparency
(cid:131) Clinical Support
(cid:131) Uniform application subject to cap
(cid:131) Protections against inappropriate reductions in care
(cid:131) Written disclosure to patients
(cid:131) Reasonable compensation
(cid:131) Per capita distributions
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OIG Advisory Opinion No 08-16
The professional limited liability corporation (PLLC) model allowed the hospital to
The professional limited liability corporation (PLLC) model allowed the hospital to
pay select physicians for attaining hospital quality targets.
pay select physicians for attaining hospital quality targets.
Key Elements of OIG Advisory Opinion No. 08-16
(cid:131) The PLLC participation was open to a broad group of medical staff members
(cid:131) Participating physicians were required to be members of the medical staff for at least
1 year
(cid:131) Participating physicians equally capitalized the new entity, although costs were
minimal
(cid:131) The hospital paid the PLLC to meet predetermined quality targets
(cid:131) Payments were capped at 50% of base-year P4P dollars (with inflation adjuster)
(cid:131) Quality targets and payments renegotiated annually
(cid:131) Monitoring in place to protect against inappropriate service reduction
(cid:131) Physicians who change referral patterns to meet targets could be terminated
(cid:131) The program maintained records of performance
(cid:131) Patients informed of the program in writing
(cid:131) The PLLC set physician participation criteria that did not induce referrals or
incentivize more volume at the hospital
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Description:The term “bundled” describes a wide range of payment models. It often refers to a payment that encompasses more than one provider’s services
