Henry Ford is one of dozens of other hospitals, medical groups and nursing homes nationally that have dropped out of the bundled payment model program over the past three years for a variety of reasons.
In 2013, three of Henry Ford Health System hospitals participated in the first phase of the Medicare bundled payment program, said David Nerenz, director of the Henry Ford's Center for Health Policy and Health Services Research.
"Three years ago we had a chance to look at practice patterns, projected episode costs and all hospitals dropped out of the program," Nerenz said. "The rules of the game, the financial targets, were changing. Hospitals had the option at the time to stay in or drop out."
Henry Ford piloted its total knee and hip replacement surgery bundled program at Henry Ford West Bloomfield Hospital, Henry Ford Wyandotte Hospital and Henry Ford Macomb Hospital. Those three hospitals conduct an average of about 650 Medicare hip and knees per year.
But the program didn't work because one-third of the services were conducted outside of the Henry Ford system wall, said Nerenz, because they are still responsible for that care.
"(Hospitals) don't have good controls on people for patterns of care. There is no way to force them where to go," Nerenz said. "It is difficult to succeed in the program."
Nerenz said Henry Ford's tracking data showed that about two-thirds of total services and dollars were controlled in the system, but one-third outside the system. "There is no way to control utilization outside. You can't control prices or utilization. If a patient needs urgent or emergent care, they go where they want," he said
One of the problems with the pilot program, Nerenz said, is that it isn't a truly bundled payment. It works like this. Providers are given a target price from Medicare. Services are rendered for 90 days with providers billing at fee-for-service prices. At the end of the 90 days, after Medicare conducts a total payment reconciliation on the care episode, the payments are compared with the program prices.
Under the contract, if total costs for hospital and post-acute-care services are less than the target price for the bundled services during a 30- or 60-day period, DMC, Trinity or other providers keep the difference. If the costs are above the target price, hospitals write a check to Medicare for the difference.
"If you are over those estimates, you pay Medicare back. If you are under, you keep the payments," Nerenz said. "It is more a shared savings program."
"Henry Ford dropped out of bundled payment; Borgess, Mercy, St. Mary's still in" originally appeared in Crain's Detroit Business.
