Ready to Accept Bundled Payments? Considerations for Smart Contracting

At the 20th Annual Ambulatory Surgery Centers Conference in Chicago, Bob Herman, a Becker's Healthcare financial editor, moderated a panel discussion on bundled payment models for ASCs with Naya Kehayes, MPH, managing principal and CEO, Eveia Health Consulting and Management, and Rebecca Overton, director of revenue cycle management for Surgical Management Professions.

Mr. Herman began by asking the panelists to explain the concept of bundled payments. According to Ms. Kehayes, there are different ways to define bundled payments, because there are different types of bundled payments. Generally, though, they involve "packaging services up in an episode of care."

Ms. Overton added that one way bundled payments agreements vary is by timeframe. “There’s not a standard global period,” she said. However, typical surgical bundled payments last 30 days, and include pre-op testing through 30-days post-procedure.

The success (or failure) of bundled payments is largely determined by a center's negotiations with payers on the bundle and the center knowing its costs. "You really have to understand your cost structure," said Ms. Kehayes.

Ms. Kehayes warned centers to ensure the payer is actually able to administer bundled payments before moving forward on any efforts to develop or present bundled packages.

If the payer can indeed administer these payments, "make sure you spell out exactly what is in that agreement," said Ms. Kehayes. For example, ensure everyone understands which costs are included in the bundle (e.g., facility fee, physician fee, anesthesia, etc.) and if there are services that are carved out and not included in the bundle. "If you do not define that, it leaves it open to interpretation," she said.

When contracting with physicians to jointly contract for facility and facility fees, the surgery center must communicate clearly to physician offices about the administrative procedures surrounding billing. The physician office billing staff must be able to identify the physicians who fall under bundled arrangements, so that they do not double bill for the physician’s services.

"It clearly can create an administrative nightmare for both the physician office and your business office," said Ms. Overton.

Both panelists, agreed, though, that there is opportunity in bundled payments.

Bundled payments make centers more attractive to payers and patients. "They can motivate the payer to send volume," said Ms. Kehayes, explaining that some payers will financially incentivize patients through lower co-payments if a patient goes to a center with bundled payments.

"Developing a good bundled program is going to be critical as we move forward, I think for all ASCs," said Ms. Overton.