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CONTENTS

AbouttheCMSAlliancetoModernizeHealthcare.......................................................................................2

ExecutiveSummary.......................................................................................................................................3
Chapter1:Overview.....................................................................................................................................6
Chapter2:SummaryofEpisodeRecommendations..................................................................................12
Chapter3:ElectiveJointReplacement.......................................................................................................16
Recommendations:ElectiveJointReplacement.........................................................................................17

Chapter4:MaternityCare..........................................................................................................................41
Recommendations:MaternityCare............................................................................................................45

Chapter5:CoronaryArteryDisease...........................................................................................................66
Recommendations:CoronaryArteryDisease.............................................................................................69
Chapter6:OperationalConsiderations......................................................................................................94
1.

RoleandPerspectivesofStakeholders...........................................................................................94

2.

DataInfrastructureIssues...............................................................................................................96

3.

RegulatoryEnvironment.................................................................................................................98

4.

InteractionbetweenCEPandPopulationBasedPayment...........................................................100

Chapter7:Conclusion...............................................................................................................................103
AppendixA:Roster...................................................................................................................................105
AppendixB:Acknowledgements..............................................................................................................107
AppendixC: ElectiveJointReplacementBundledPaymentModels ........................................................108

AppendixD:
MaternityCareBundledPaymentModels
...........................................................................115

AppendixE:CoronaryArteryDiseaseBundledPaymentModels
............................................................
123
AppendixF:ElectiveJointReplacementImplementationResources.......................................................
126

AppendixG:
MaternityCareImplementationResources
.........................................................................130
AppendixH:CoronaryArteryDiseaseImplementationResources..........................................................134
AppendixI:LANRelatedContent.............................................................................................................138
AppendixJ:PrinciplesforPatientandFamilyCenteredPayment.......................................................... 140

AppendixK:Resources..............................................................................................................................142

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AbouttheCMSAlliancetoModernizeHealthcare
TheCentersforMedicare&MedicaidServices(CMS)sponsorstheCMSAlliancetoModernize
Healthcare(CAMH),thefirstfederallyfundedresearchanddevelopmentcenter(FFRDC)dedicatedto
strengtheningournationshealthcaresystem.TheCAMHFFRDCenablesCMS,theDepartmentofHealth
andHumanServices(HHS),andothergovernmententitiestoaccessunbiasedresearch,advice,
guidance,andanalysistosolvecomplexbusiness,policy,technology,andoperationalchallengesin
healthmissionareas.TheFFRDCobjectivelyanalyzeslongtermhealthsystemproblems,addresses
complextechnicalquestions,andgeneratescreativeandcosteffectivesolutionsinstrategicareassuch
asqualityofcare,newpaymentmodels,andbusinesstransformation.
FormallyestablishedunderFederalAcquisitionRegulation(FAR)Part35.017,FFRDCsmeetspecial,long
termresearchanddevelopmentneedsintegraltothemissionofthesponsoringagencyworkthat
existinginhouseorcommercialcontractorresourcescannotfulfillaseffectively.FFRDCsoperateinthe
publicinterest,freefromconflictsofinterest,andaremanagedand/oradministeredbynotforprofit
organizations,universities,orindustrialfirmsasseparateoperatingunits.TheCAMHFFRDCappliesa
combinationoflargescaleenterprisesystemsengineeringandspecializedhealthsubjectmatter
expertisetoachievethestrategicobjectivesofCMS,HHS,andothergovernmentorganizationscharged
withhealthrelatedmissions.Asatrusted,notforprofitadviser,theCAMHFFRDChasaccess,beyond
whatisallowedinnormalcontractualrelationships,togovernmentandsupplierdata,includingsensitive
andproprietarydata,andtoemployeesandgovernmentfacilitiesandequipmentthatsupporthealth
missions.
CMSconductedacompetitiveacquisitionin2012andawardedtheCAMHFFRDCcontracttoTheMITRE
Corporation(MITRE).MITREoperatestheCAMHFFRDCinpartnershipwithCMSandHHS,andmaintains
acollaborativeallianceofpartnersfromnonprofits,academia,andindustry.Thisallianceprovides
specializedexpertise,healthcapabilities,andinnovativesolutionstotransformdeliveryofthenations
healthcareservices.Governmentorganizationsandotherentitieshavereadyaccesstothisnetworkof
partners,includingRANDHealth,theBrookingsInstitution,andotherleadinghealthcareorganizations.
Thisincludesselectqualifiedsmallanddisadvantagedbusiness.TheFFRDCisopentoallCMSandHHS
OperatingDivisionsandStaffDivisions.Inaddition,governmententitiesoutsideofCMSandHHScanuse
theFFRDCwithpermissionofCMS,CAMHsprimarysponsor.

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ExecutiveSummary
TheHealthCarePaymentLearning&ActionNetwork
(LAN)wascreatedtodrivealignmentinpayment
approachesacrossandwithinthepublicandprivate
sectorsoftheU.S.healthcaresystem.Toadvancethis
goal,theClinicalEpisodePayment(CEP)WorkGroup
(theWorkGroup)wasconvenedbytheLANGuiding
Committeeandchargedwithdeveloping
recommendationsforthepurposeofaccelerating
adoptionofalignedclinicalepisodepaymentmodelsin
theareasofelectivejointreplacement,maternitycare,
andcoronaryarterydisease.Composedofdiversehealth
carestakeholders,theWorkGroupdeliberated,
incorporatedinputfromLANparticipants,andreached
consensusonmanycriticalissuesrelatedtodesigning
personcenteredclinicalepisodepayment,whichisthe
subjectofthisWhitePaper.
Clinicalepisodepaymentmodelsaredifferentfrom
traditionalfeeforservice(FFS)healthcarepayment
models,inwhichprovidersarepaidseparatelyforeach
servicetheydeliver.Instead,clinicalepisodepayment
modelstakeintoconsiderationthequality,costs,and
outcomesforapatientcenteredcourseofcareovera
setperiodoftimeandacrossmultiplesettings.This
courseofcareisknownastheclinicalepisode.Research
suggeststhatwhenpaymentsforhealthcarearebased
onthecaredeliveredinaclinicalepisode,theresultis
increasedcoordinationofcare,enhancedqualityofcare,
andlessfragmentationinthemedicalsystem.Thisleads
tobetterexperiencesandhealthforpatientsandlower
costsforpayersandproviders.
Sincethefirstepisodepaymentswereintroducedmore
than30yearsago,publicandprivatepurchasers(anda
rangeofdeliverysystems)haveexploredavarietyof
episodepaymentmodelswithvaryingdegreesof
success.Thisisbecause,asresearchhasshown,while
episodepaymentsoffergreatpotentialasanalternative
toFFScare,designingandimplementingsuchmodels
comeswithfinancial,technological,cultural,logistical,
andinformationalobstacles.Thesechallenges,along
withthesheerdiversityofdesignsandapproaches
currentlyinuse,havemadeitdifficulttopromote
alignmentandaccelerationofpaymentmodelsacross
theU.S.healthcaresystem.

HealthCarePayment
Learning&ActionNetwork
Toachievethegoalofbettercare,
smarterspending,andhealthier
people,theU.S.healthcaresystem
mustsubstantiallyreformits
paymentstructuretoincentivize
quality,positivehealthoutcomes,
andvalueovervolume.Such
alignmentrequiresafundamental
changeinhowhealthcareis
organizedanddeliveredandrequires
theparticipationoftheentirehealth
careecosystem.TheHealthCare
PaymentLearning&ActionNetwork
(LAN)wasestablishedasa
collaborativenetworkofpublicand
privatestakeholders,includinghealth
plans,providers,patients,employers,
consumers,states,federalagencies,
andotherpartnerswithinthehealth
careecosystem.Bymakinga
commitmenttochangingpayment
models,establishingacommon
framework,aligningapproachesto
paymentinnovation,sharing
informationaboutsuccessfulmodels,
andencouraginguseofbest
practices,theLANcanhelpreduce
barriersandacceleratetheadoption
ofalternativepaymentmodels
(APMs).
U.S.HealthCarePaymentsinAPMs

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Thus,theCEPWorkGroupschargewasto:

Provideadirectionalroadmapforproviders,healthplans,patientsandconsumers,purchasers,and
states,basedonexistingeffortsandinnovativethinkingintherealmofclinicalepisodepayment;

PromotealignmentinbothCEPdesignandoperationalapproach;

Strikeabalancebetweenalignment/consistencyandflexibility/innovation;

Findthebalancebetweenshorttermfeasibilityandlongtermaspiration;and

RecognizetheeffectsofanevolvinghealthcaresystemonthedesignandimplementationofCEP.

TheWorkGroupselectedthreeclinicalfocusareasonwhichtobuildepisodepaymentmodels:elective
jointreplacement(EJR),maternitycare,andcoronaryarterydisease(CAD).Foreachepisodemodel,the
LANreleasedadraftWhitePaperthatlaidoutasetof10designelementrecommendations,aswellas
operationalconsiderations.EachdraftWhitePaperwasmadeavailabletothepublicfora30day
commentperiod,andthosecommentsresultedinsignificantrevisionsacrossseveraldesignelement
recommendations.
Anumberofcrosscuttingthemesemergeacrossallthreeepisodes:
Consumer,patient,andfamilyengagementiscriticaltodrivingvaluebasedcare:Atthepatientlevel,
thismeansengagingindividualpatientsandfamiliesandsupportingtheminbeingpartnersintheircare.
Atthesystemlevel,thisinvolvesengagingconsumers,patients,families,andtheiradvocatesin
meaningfulparticipationinthedesign,implementation,governance,evaluation,andquality
improvementofepisodepaymentmodels.Engagementcanbereflectedbyprovidersacknowledging
andincorporatingthetypesofcarethatpatientsvalue;orbypayers,purchasersandprovidersensuring
thatinformationaboutpaymentandreimbursementisavailableinawaythatislinguisticallyand
culturallyappropriateandtailoredtothehealthliteracylevelofpatientsandfamilies.Otherspecific
examplesofhowtofacilitatethisengagementarefoundthroughoutthepaper.
Inclinicalepisodeswithnumerouscareteammembers,thereareanumberofvariablestoconsiderin
assigningaccountability:Acommonfeatureacrossthethreeclinicalepisodesdescribedinthispaper,as
wellasclinicalepisodesingeneral,isthattheyarecomposedofcaredeliveredinmultiplesettingsbya
careteamthatincludesnumerouscliniciansandotherproviders.WhiletheWorkGroupinitially
intendedtorecommendspecifictypesofproviders(e.g.thepatientscardiologistorprimarycare
providerinthecoronaryarterydiseaseepisode),thefinalrecommendationdescribesthemany
variablesthatplayintoacliniciansabilitytotakeresponsibilityforthepatient,bothfromafiscaland
fromaqualityoutcomesstandpoint.Thesevariablesmayapplyregardlessoftheclinicalfocusforany
givenepisodepaymentmodel.
Certaindesigndecisionshingeonwhetherimplementationismandatoryorvoluntary:AstheWork
Groupstudiedandanalyzedmanyepisodepaymentinitiatives,akeyelementthatseemedtodrive
variousdesigndecisionswaswhethertheinitiativewasvoluntaryforprovidersorwhetheritwasa
programmandatedbythestateorotherentity.Forexample,ifastatemandatesepisodepaymentinits
Medicaidprogram,itmayhavemoreleewaytorequirethatproviderstakeonbothupsiderewardas
wellasdownsiderisk.Inavoluntaryinitiative,thepayer(orotherimplementer)maydesignthe
programaroundupsiderewardonly,whileencouragingproviderstoachieveastateofreadiness
necessarytotakeondownsiderisk.

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Usinghistoricaldatatodeterminetheepisodepricecreateschallengesforpaymentandcare
transformation:Settingtheepisodepriceisacriticalaspectofepisodepaymentdesign.Yet,itcreatesa
significantchallenge.Historicaldataiscrucialtogivingpayersandprovidersanunderstandingofthe
resourcesneededtodeliverhighqualitycareandoptimaloutcomes.However,thatsamehistoricaldata
maylikelyreflectcarethatwasunnecessaryorinappropriate,andmaynotreflectthepotentialforlow
cost,highvalueservicesthathavetraditionallynotbeenusedbecausetheprovidersdonotgetpaidfor
them.Theseincludecarecoordinationservices,lifestylechangesupport(inthecaseofcoronaryartery
disease),orprenatalparentingeducationsupport(inthecaseofmaternitycare).
Arobustdatainfrastructureiscriticaltoanepisodepaymentmodelssuccess:TheWorkGroupheard
frommanycommentersabouttheimportanceofproviders,payers,patients,andpurchasershaving
accesstodatainawaythatsupportsthekindofcarecoordinationandcaredeliverythatiscentralto
optimizingoutcomesforpatientsviaanepisodepaymentmodel.
TheWhitePaperprovidesrecommendationsfordesigningclinicalepisodepaymentintheabove
mentionedclinicalareasofelectivejointreplacement,maternitycare,andcoronaryarterydisease,with
thegoalofcreatingalignedmodelsthatleadtoimprovedoutcomesforpatients.
Asummarydescriptionofthedesignrecommendationsforeachepisodecanbefoundin Chapter2,
EpisodePaymentDesignElements.Chapters3,4,and5,respectively,provideasetofrecommendations
anddetaileddiscussionsaboutclinicalepisodesforelectivejointreplacement, maternity,andcoronary
arterydisease.Chapter6,OperationalConsiderations,discussesissuestoconsiderin movingfrom
episodepaymentdesigntooperationalizationandimplementation.TheWhitePaperconcludeswith
someimmediatenextstepsthatstakeholderscantaketoadvancetheWorkGroupsrecommended
approachtodesigningclinicalepisodepaymentmodels.

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Chapter1:Overview
TheLANestablisheditsGuidingCommittee(GC)inMay2015asthecollaborativebodychargedwith
advancingalignmentofpaymentapproachesacrossandwithintheprivateandpublicsectors.This
alignmentaimstoacceleratetheadoptionanddisseminationofmeaningfulfinancialincentivesto
rewardprovidersandsystemsofcarethatimplementpersoncenteredcare andpatientresponsive
deliverysystems.CAMH,thefederallyfundedresearchanddevelopmentcenteroperatedbythe MITRE
Corporation,wasaskedtoconvenethisnationalinitiative.
InkeepingwiththegoalsofHHS,theLANaimstohave30%ofU.S.healthcarepaymentsinalternative
paymentmodelsby2016and50%by2018.Onepromisingareaforpaymentinnovationandalignment
isinpaymentforepisodesofcaretoimprovepatientoutcomes,enhancehealthsystemperformance,
andcontrolcosts.Aclinicalepisodepaymentisabundledpaymentforasetofservicesthatoccurover
timeandacrosssettings.Thispaymentmodelcanbeappliedinvariousways:

Atthesettinglevel,wherebytheepisodeisfocusedonahospitalstay;

Attheprocedurelevel,inwhichtheepisodeencompassesadefinedsurgicalprocedure;or

Attheconditionlevel,wherebytheepisodeisdefinedaroundacondition.Conditionsforwhich
episodepaymentcanbeusedrangefromasthmatodiabetestocancer.

Bundlingpaymentsforepisodesofcareshowspromiseforreducingcostsandimprovingthequalityof
care.Currently,thereismuchinterestinepisodebasedpaymentmodels.Bothpublicandprivate
purchasersareexploringhowbesttopromoteaccelerationandalignmentofthesemodelsbecause
episodepaymentsofferaparticularlypromisingapproachtoefficientlycreateandsustaindelivery
systemsthatadvancevalue,quality,costeffectiveness,andpatientengagement.
Therecommendationsinthispaperarepresentedwithrecognitionoftheevolvinghealthcaresystem,
andthemanyforcesthatareseekingtoacceleratethemovementfromFFStopayingforvalue.These
includethefederalinitiativesestablishedbytheAffordableCareAct,includingtheCMSInnovation
CenteranditsmodelsliketheBundledPaymentforCareInitiative(BPCI)andComprehensivePrimary
CarePlus(CPC+).ThisalsoincludesmorerecentlegislationaimedatacceleratingtheadoptionofAPMs
liketheMedicareAccessandCHIPReauthorizationAct(MACRA).
Whereacceleratedadoptionofalignedmodelsdoesoccur,itmustdosoinawaythatsupportsperson
centeredcare.Thispaperprovidessubstantiveinformationonhowepisodepaymentmodelscanbe
designedtodojustthat.Meaningfullyengagingconsumers,patients,families,andtheiradvocates
requiresasetoftoolsandinformationthatarecrucialtonotjustepisodepayment,buttoalternative
paymentmodelsoverall(Figure1).Consumers,patients,families,andtheiradvocatesshouldbe
collaborativelyengagedinallaspectsofdesign,implementationandevaluationofpaymentandcare
models,andtheyshouldbeengagedaspartnersintheircare.Personcenteredepisodepaymentmodels
haveastronginvestmentinengagingpatientsinmultipleways,includingsharedcareplanning,shared
decisionmaking,comparativequalityinformation,carecoordination,chronicdiseasemanagement
tools,transparencyofpaymentinformation,andcaretransitionsupport.Tobeeffective,
communicationsandresourcesmustbetailoredtothehealthliteracylevelofpatientsandfamilies,and
belinguisticallyandculturallyappropriate.

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Figure1:ToolsforFosteringPatientandFamilyEngagement

PurposeoftheWhitePaper
InNovember2015,theGCconvenedtheCEPWorkGroupandchargedthegroupmemberswith
creatingasetofrecommendationsthatcanfacilitatetheadoptionofclinicalepisodebasedpayment
models(CEPWorkGroupmembersparticipatedinthiseffortasindividualsandnotonbehalfoftheir
respectiveorganizations).TheGCnotedaspecificinterestinmodelsthatfallwithinCategory3APMs
builtonanFFSarchitectureandCategory4populationbasedpaymentof theLANsAlternative
PaymentModelFramework,whichcanbefoundhere.
ClinicalepisodepaymentmodelsaredifferentfromtraditionalFFShealthcarepaymentmodels,in
whichprovidersarepaidseparatelyforeachservicetheydeliver.Instead,clinicalepisodepayment
modelstakeintoconsiderationthequality,costs,andoutcomesofapatientcenteredcourseofcare
overasetperiodoftimeandacrossmultiplesettings.Thiscourseofcareisknownastheclinical
episode.Researchsuggeststhatwhenpaymentsforhealthcarearebasedonthecaredeliveredina
clinicalepisode,theresultisincreasedcoordinationofcare,enhancedqualityofcare,andless
fragmentationinthemedicalsystem.Thisleadstobothbetterexperiencesandhealthforpatientsand
lowercostsforpayersandproviders.
Sincethefirstepisodepaymentswereintroducedmorethan30yearsago,publicandprivatepurchasers
(andarangeofdeliverysystems)haveexploredavarietyofepisodepaymentmodelswithvarying
degreesofsuccess.Thisisbecause,asresearchhasshown,whileepisodepaymentsoffergreatpotential
asanalternativetoFFScare,designingandimplementingsuchmodelscomeswithfinancial,
technological,cultural,logistical,andinformationalobstacles.Thesechallenges,alongwiththesheer
diversityofdesignsandapproachescurrentlyinuse,havemadeitdifficulttopromotealignmentand
accelerationofpaymentmodelsacrosstheU.S.healthcaresystem.

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Thus,thepurposeofthispaperistoprovideanepisodepaymentdesignframework,aswellas
recommendationspertainingtoeachofthetenelementsinsaidframework,thatwillsupportadoption
ofalignedepisodepaymentmodelsintheareasofelectivejointreplacement,maternitycare,and
coronaryarterydisease.TheWorkGroupdevelopedtheserecommendationswithrecognitionofthe
evolvinghealthcaresystem,andthemanyforcescurrentlyseekingtoacceleratethemovementfrom
FFStovaluebasedpayment.

PriorityAreas
Withthiscontextinmind,theCEPWorkGroupsvieweditschargeasthefollowing:

Provideadirectionalroadmapforproviders,healthplans,patientsandconsumers,purchasers,and
states,basedonexistingeffortsandinnovativethinking;

Promotealignment(withinthecommercialsector,aswellasacrossthepublicandcommercial
sectors)inbothdesignandoperationalapproach;

Findabalancebetweenalignment/consistencyandflexibility/innovation;

Strikeabalancebetweenshorttermrealismandlongtermaspirations;and

Recognizethattherecommendationswillbeviewedwithinthecontextofanevolvinghealthcare
systemenvironment,acknowledgingtheeffectsofMACRAandotherCMSinitiatives.

InconveningtheCEPWorkGroup,theGCstipulatedthattheWorkGroupshouldtakecertain
considerationsintoaccountastheyexploredopportunitiestoadvancethealignmentandadoptionof
episodebasedAPMs.Indevelopingitsrecommendations,theGCnotedthattheCEPWorkGroup
shoulddevelopalistofpriorityareasthattogetherreflectabroadspectrumofpotentialepisodetypes,
representadiverserangeofpatients,andhavethepotentialtobewidelyadoptableandusefulacross
theentireU.S.healthsystem.TheWorkGroupusedthecriteriainFigure2toprioritizethediseasesand
conditionsonwhichtheirworkwouldfocus.
Figure2:CriteriaforPrioritization

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Basedontheseconsiderations,theCEPWorkGroupagreedtofocusonthefollowingthreepriority
areas:

Electivejointreplacement;

Maternitycare;and

Coronaryarterydisease.

TheCEP
WorkGroup
chosethesethreepriorityareasbecause
theyhavethegreatestpotentialtocreate

agreaterconsensusandalignment
ofpaymentmethodsacrosspayersand,overtime,
toacceleratethe

adoptionofclinicalepisodebasedpayments.

KeyPrinciples

BeforetheCEPWorkGroupset
outtodevelopitsrecommendations,themembersdevelopedasetof

keyprinciplestoguide
theirassessmentofmodelscurrentlyinuse.Theseprinciplesalignwiththe

broaderset
ofprinciplesdescribedin
theLANAPMFrameworkWhitePaper.Theyare,however,

focusedspecificallyonthe
designofepisodepayments.Inaddition,
intheirresearchand
discussion,the

CEPWorkGroupchoseclinicalareasinwhich
clinicalepisodepaymentin
particularcouldalsoachieve
oneormoreofthefollowing:
Incentivizepersoncenteredcare:One
intendedeffectofAPMs(andaprinciple
oftheLANAPM

Framework1)istodeliver2personcenteredcare,definedashighqualitycarethatisevidencebased,

deliveredinanefficientmanner,andwherepatientsandcaregiversindividualpreferences,needs,and
valuesareparamount.Recognizing
thatpaymentreformmustultimatelyservetheinterestsof

consumersandpatients,theLAN
GuidingCommitteeendorsedasetofPrinciplesforPatientand

FamilyCenteredPayment.Theseprinciples,preparedbytheLAN
ConsumerandPatientAffinityGroup,

areintendedasguideposts
sothatnew
paymentmodelsandimplementationactivitiescanaddressthe

needsandprioritiesofpatientsandfamilies.TheprinciplesarereflectedinthisWhitePaper,andtheir
text
isincluded
in
Appendix
J.

Improve
patientoutcomesthrough
effectivecarecoordination:
Episodepaymentencouragesproviders

tobettercoordinatecareacrossandwithincaresettings,andtofocusmorestronglyoncarequality
to

achievebettercare,smarterspending,andhealthier
people.Effectivecarecoordinationisparticularly

importantforthosewith
chronicconditionsandforotherhighrisk/highneedpatients.

Rewardhighvaluecare:AnotherintendedeffectofAPMsistorewardhighvaluecareby
incentivizing

providersandpatients,togetherwiththeirfamilycaregivers,todiscussthe
appropriatenessofservices,

including
certainprocedures.Inthis
way,servicesthatdonotalignwithpatientpreferencescanbe

avoided.
Reduce
unnecessarycosts:Reducing
unnecessarycoststo
thepatientandtothehealthcaresystemis

anotherintendedeffectofAPMs.Episodepaymentoffersincentivestoexamine
allthe
costdrivers

acrosstheepisode,includingfragmentation,duplication,siteofservice,volumeofservices,andinput
costs/prices.Episodepaymentcancreateanapplestoapplescomparisonforassessingqualityand

1Principle1oftheAPMFramework

2DefinitionofPatientCenteredCare(APMFrameworkWhitePaper,page4)

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cost(forpayersandconsumers).Thiswelldefinedproductallowsbuyerstocomparepriceand
quality.

RecommendationsFramework:DesignandOperations
TheWorkGroupsrecommendationsfallintotwocategories:

DesignElements:Thedesignelementsaddressquestionsstakeholdersmustconsiderwhen
designinganepisodepaymentmodel,includingthedefinition,thedurationoftheepisode,and
whatservicesaretobeincluded(Figure3);and

OperationalConsiderations:Operationalconsiderationsrelatetoimplementinganepisodepayment
model,includingtherolesandperspectivesofstakeholders,datainfrastructureissues,andthe
regulatoryenvironmentinwhichAPMsmustoperate.Operationalconsiderationsshouldnotbe
assessedinavacuumsincetheyareinterrelatedwiththedesignelementdecisions.
Figure3:EpisodePaymentDesignElementsandOperationalConsiderations

Thispaperisorganizedaccordingtothefollowingstructure:

SummaryofEpisodeDesignElementRecommendationsforelectivejointreplacement,maternity
care,andcoronaryarterydisease;

Achapteroneachofthethreeepisodesthatprovidesmoreindepthdiscussionon1)whythe
clinicalfocusareaisappropriateforapplyingepisodepaymenttoachieveimprovementsinquality
andoutcomes;and2)thethinkingbehindeachofthetendesignelementrecommendations;and

Achapteronoperationalconsiderations(stakeholderperspectives,datainfrastructure,and
regulatoryenvironment)thatcutacrossthethreeclinicalepisodepaymentmodels.Alsoincludedin
thischapterisadiscussionofquestionsandissuesthatmayariseinthecourseofimplementing
clinicalepisodepaymenttogetherwithanotherAPM,namely,populationbasedpayment.
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Chapter2:SummaryofEpisodeRecommendations
TheCEPWorkGroupconductedresearchandanalysisonarangeofexistingepisodepaymentinitiatives.
Basedontheirexperienceandtheanalysisofcurrentinitiatives,theWorkGroupidentifiedasetof10
episodepaymentmodeldesignelements(Figure3).Theseelementsreflectthedecisionsthatpayers
andprovidersneedtomakepriortoimplementation.Thetablesbelowsummarizethe10
recommendations,basedonthedesignelementsthatarediscussedinthisWhitePaper.
Table1:SummaryofJointReplacementEpisodeRecommendations

Episode
Definition

Theepisodeisdefinedasanelectiveandappropriatetotalhiportotalkneereplacementdue
toosteoarthritis.

Episode
Timing

Theepisodeshouldstartpreprocedure(e.g.30days),andend90dayspostdischargeinorder
toincludethemostresourceintensiveaspectsofcareforelectivejointreplacementpatients.
Accountabilityforfunctionalimprovementandperformancemeasurementgoesbeyond90
days.

Patient
Population

Theepisodeshouldapplytothebroadestpossiblepoolofpatients,usingriskandseverity
adjustmenttoaccountforageandcomplexity.

Services

Allservicesneededbythepatientthatarerelatedtothejointreplacementprocedureshould
becoveredbytheepisodeprice.

Requireuseofshareddecisionmakingandpatientengagementtools,transparencyof
Patient
Engagement performanceandthepaymentmodel,sharedcareplanning,accesstofullhealthrecords,care
coordination,andpatientreportedqualitymeasuresinpatientfacingmaterialstomaximize
opportunitiestoengagepatientsandfamiliesinadvancinghighvaluecare,bothfor
themselvesandoverall.

Accountable Theaccountableentityshouldbechosenbasedonreadinesstoreengineerchangeintheway
careisdeliveredtothepatientandtoacceptrisk.Inthismodel,theaccountableentitywill
Entity
likelyrequireadegreeofsharedaccountability,giventhenumberofcliniciansworkingtocare
forapatient.

Payment
Flow

Theuniquecircumstancesoftheepisodeinitiativewilldeterminethepaymentflow.Thetwo
primaryoptionsare:1)aprospectivelyestablishedpricethatispaidasonepaymenttothe
accountableentity;or2)upfrontFFSpaymenttoindividualproviderswithintheepisodewith
retrospectivereconciliationandapotentialforsharedsavings/losses.

Episode
Price

Theepisodepriceshouldstrikeabalancebetweenproviderspecificandmulti
provider/regionalutilizationhistory.Thepriceshould:1)acknowledgeachievableefficiencies
alreadygainedbypreviousinitiatives;2)reflectalevelthatpotentialproviderparticipantssee
asfeasibletoattain;and3)includethecostofservicesthathelpachievethegoalsofepisode
payment.

Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.
Typeand
LevelofRisk Transitionperiodsandriskmitigationstrategiesshouldbeusedtoencouragebroadprovider
participationandsupportinclusionofasbroadapatientpopulationaspossible.

Quality
Metrics

Prioritizeuseofmetricsthatcapturethegoalsoftheepisode,includingoutcomemetrics,
particularlypatientreportedoutcomeandfunctionalstatusmeasures;usequalityscorecards
totrackperformanceonqualityandinformdecisionsrelatedtopayment;andusequality
informationandothersupportstocommunicatewith,andengagepatientsandother
stakeholders.

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Table2:SummaryofMaternityCareEpisodeRecommendations

Episode
Definition

Theepisodeisdefinedtoincludethelargemajorityofbirths,includingthenewborncare,that
arelowerrisk.Whilenotnecessarilylowerrisk,episodepaymentmayalsobeconsidered
appropriateforwomenwhomaybeatelevatedriskduetoconditionsthathavedefinedand
predictablecaretrajectories,suchasgestationaldiabetes.AstheCEPmodelmatures,some
groupswithsignificanthighriskpregnancyexperienceandcapacitymayseektomanagethe
entirecontinuumofrisk.

Episode
Timing

Theepisodeshouldbegin40weeksbeforethebirthandend60dayspostpartumforthe
woman,and30dayspostbirthforthebaby.

Patient
Population

Theepisodeshouldprimarilyincludethelargemajorityofbirths,includingnewborncare,that
arelowerrisk.TheWorkGroupalsosupportsCEPforwomenwhomaybeatelevatedrisk
becauseofpredictableriskfactorsthathavedefinedcaretrajectories,suchasgestational
diabetes.

Services

Coveredservicesincludeallservicesprovidedduringpregnancy,laborandbirth,andthe
postpartumperiod(forthewomen)andnewborncareforthebaby.Exclusionsshouldbe
limited.Initiativesshouldalsoconsiderincludinghighvaluesupportservices,suchasdoula
careandprenatalandparentingeducation.

Engagingwomenandtheirfamiliesiscriticalinallthreephasesoftheepisodeprenatal,
Patient
Engagement laborandbirth,andpostpartum/newborntocontributetothefoundationforhealthy
womenandbabies.

Accountable Theaccountableentityshouldbechosenbasedonreadinessto
reengineerchangeinthewaycareisdeliveredtothepatientandtoacceptrisk.Inthis
Entity

model,theaccountableentitywilllikelyrequireadegreeofsharedaccountability,giventhe
numberofcliniciansworkingtocareforapatient.

Payment
Flow

Theuniquecircumstancesoftheepisodeinitiativewilldetermine
thepaymentflow.Thetwoprimaryoptionsare:1)aprospectivelyestablishedpricethatis
paidasonepaymenttotheaccountableentity;or2)upfrontFFSpaymenttoindividual
providerswithintheepisodewithretrospectivereconciliationandapotentialforshared
savings/losses.

Episode
Price

Theepisodepriceshouldstrikeabalancebetweenproviderspecific
andmultiprovider/regionalutilizationhistory.Thepriceshould:
1) acknowledgeachievableefficienciesalreadygainedbypreviousinitiatives;2)reflectalevel
thatpotentialproviderparticipantsseeasfeasibletoattain;and3)includethecostofservices
thathelpachievethegoalsofepisodepayment.

Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.Transitionperiodsandrisk
Typeand
LevelofRisk mitigationstrategiesshouldbeusedtoencouragebroadproviderparticipationandsupport
inclusionofasbroadapatientpopulationaspossible.

Quality
Metrics

Prioritizeuseofmetricsthatcapturethegoalsoftheepisode,including
outcomemetrics,particularlypatientreportedoutcomeandfunctional
statusmeasures;usequalityscorecardstotrackperformanceonquality
andinformdecisionsrelatedtopayment;andusequalityinformationandothersupportsto
communicatewith,andengagepatientsandotherstakeholders.

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Episode
Definition

Episode
Timing
Patient
Population
Services

Table3:SummaryofCoronaryArteryDiseaseEpisodeRecommendations
TheepisodeisdefinedascareforacohortofpatientswithdiagnosedCAD,fora12month
periodthatwillultimatelyalignwiththebenefityear(seeEpisodeTiming).Oncealignedwith
thebenefityear,theepisodewillcontinueforconsecutiveperiodsof12monthsofactivecare
managementforaslongasapatientisunderactivemanagementforCAD.PCIand/orCABG
proceduresdeemednecessaryduringanygiven12monthepisodeperiodwillalsobe
deliveredwithinanepisodepaymentmodel.
The12monthconditionepisodemaycommenceatvariouspointspostCADdiagnosis.Forany
nestedprocedurewithintheconditionlevelepisode,theprocedureepisodebegins30days
preprocedureandlasts3090dayspostdischarge.
Condition:PatientsdiagnosedwithCADandinsamehealthplanforfull12months.
Procedure:PatientsdeemedtoneedPCIorCABGbasedondeterminationofappropriateness.
Forboththeconditionandprocedureepisodes,theservicesshouldincludecoreservicesfor
CADmanagement(e.g.,lifestylechanges,medicationmanagement,andsecondary
prevention);andcoreservicesforthequalitydeliveryofaprocedure(e.g.,preoperative
diagnostics,drugsanddevices,caretransitionsupport,andpostacutecareincludingcardiac
rehab).

Patient
Modelsshouldsupportpatientandfamilyinvolvementinepisodepaymentdesign,
Engagement implementation,andevaluation,andpatientandfamilyengagementinallphasesofcardiac
care.Thisshouldbefacilitatedbyhealthinformationtechnology.

Accountable Theaccountableentityshouldbechosenbasedonreadinesstoreengineerchangeintheway
Entity
careisdeliveredtothepatient,andtoacceptrisk.Inthismodel,theaccountableentitywill
likelyrequireadegreeofsharedaccountability,giventhenumberofcliniciansworkingtocare
forapatient.

Payment
Flow
Episode
Price

Typeand
Level
ofRisk
Quality
Metrics

Theuniquecircumstancesoftheconditionlevel/nestedprocedureepisodemodelmakes
upfrontFFSpaymenttoindividualproviderswithintheepisode,withretrospective
reconciliationandapotentialforsharedsavings/risk,themorefeasibleoption.
Theepisodepriceshouldstrikeabalancebetweenproviderspecificandmulti
provider/regionalutilizationhistory.Thepriceshould:1)acknowledgeachievableefficiencies
alreadygainedbypreviousinitiatives;2)reflectalevelthatpotentialproviderparticipantssee
asfeasibletoattain;and3)includethecostofservicesthathelpachievethegoalsofepisode
payment.
Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.Transitionperiodsandrisk
mitigationstrategiesshouldbeusedtoencouragebroadproviderparticipationandsupportas
broadapatientpopulationaspossible.
Prioritizeuseofmetricsthatcapturethegoalsoftheepisodeatboththeconditionand
procedurelevels.Theseincludeoutcomemetrics,patientreportedoutcomeandfunctional
statusmeasures,andsomeprocessmeasuresrelatedtoprocedures.Usequalityscorecardsto
trackperformanceonqualityandinformdecisionsrelatedtopayment.Usequality
informationandothersupportstocommunicatewith,andengagepatientsandother
stakeholders.

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Chapter3:ElectiveJointReplacement
Background:WhyUseEpisodePaymentforElectiveJointReplacement?
Totalhipandtotalkneereplacementsareamongthemostcommonlyperformedsurgicalprocedures
today.AccordingtotheU.S.CentersforDiseaseControlandPrevention,overonemillionsuch
proceduresareperformedeachyearacrossallpayers.Despitethehighvolumeofthesesurgeries,
outcomesandcostsofcareforjointreplacementsurgeriesvarygreatlyamongprovidersandacross
geographicareas(Table4).Thisvariation,combinedwithaclearcaretrajectory,theavailabilityof
qualitymeasures,andtheabilitytoempowerconsumers,madeitanidealfocusfortheCEPWorkGroup
todeveloprecommendations.
Table4:JointReplacementintheU.S.:Prevalence,Cost,andOpportunitiesforImprovement3

CommercialMarket

Medicare

Numberof
Procedures

In2011,thereweremorethan
645,000kneereplacementsand
morethan306,000hip
replacements(AmericanAcademy
ofOrthopaedicSurgeons,2014).

In2014,FFSMedicarecoveredmorethan400,000procedures(U.S.
DepartmentofHealthandHumanServices,2015).

Reasonfor
Procedure

Jointreplacementsaremostoften
duetoosteoarthritis.Hip
replacementsmayalsobedueto
fracture.

Jointreplacementsaremostoftenduetoosteoarthritis.Hip
replacementsmayalsobeduetofracture.

Spendingby
Payers

Kneereplacementcostsrange
from$11,317to$69,654.

In2014,onhipandkneereplacement,FFSMedicarespentmore
than$7billion(includingcostsharing)forthehospitalizationsalone
(U.S.DepartmentofHealthandHumanServices,2015).

Hipreplacementcostsrangefrom
$11,327to$73,987(BlueCross
BlueShieldAssociation&Blue
HealthIntelligence,2015).

Thedatainthistableincludesbothelectiveandnonelectivejointreplacement,aswellasjointreplacements
conductedforreasonsotherthanosteoarthritis.
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Medicare

CommercialMarket

Variationin
Cost

Thecostofajointreplacementprocedurecanvarybytensof
thousandsofdollars,dependingonthegeographiclocation.

Medicareexpendituresfor
surgery,hospitalization,and
postacuterecoveryrangefrom
$16,500to$33,000,across
geographicareas(U.S.
DepartmentofHealthand
HumanServices,2015).

Variationcanoccurwithinthesamemetropolitanmarket.For
example,inDallas,akneereplacementcancostanywherefrom
$16,000to$61,000,dependingonthehospital.InBoston,ahip
replacementcancostanywherebetween$17,000and$73,987.
Astudyof64marketsintheU.S.foundthatcostscanvaryupto
313%(BlueCrossBlueShieldAssociation&BlueHealth
Intelligence,2015).
Factors
Affecting
Variation
between
Commercial
Marketand
Medicare

Duplicationofexams,imaging,andotherdiagnosticsduetolack
ofcommunicationbetweenthesurgicalpracticeandthe
hospital.

Siteofservice;i.e.performingtheprocedureinaninpatient
hospitalsettingwhenalesscostlyoutpatientsettingwouldbe
deemedsafeandappropriateforagivenpatient.

Variationinthepricepaidforinpatientlengthofstay.

Delaysand/orlackofcoordinationintransferringpatientsfrom
hospitaltopostacutecare(homehealth,outpatientor
inpatientrehabilitation,orskillednursing).

Variationinvalueandcostofservices,technology,equipment,
andimplants.

Variationintheuseofstandardizedcareprotocols.

Variationin,andunnecessaryuseof,highintensity,postacute
care(PAC).

Source:TheMITRECorporation.

Medicare,Medicaid,largepurchasers,commercialpayers,andprovidershavealldevelopedclinical
episodepaymentstrategiesforhipandkneejointreplacementin anefforttoreducevariationandthus
positivelyaffectoverallcostsandvariation.Asdescribedinin AppendixC:SummaryofJoint
ReplacementInitiativesReviewed,jointreplacementepisodepaymenteffortstendtocorrelatewith
reduceduseofnonvalueaddedcare,suchasunnecessarypostacutecare,lengthyinpatienthospital
stays,avoidablecomplicationsandreadmissions,allofwhichtogethercontributetobetteroutcomes
andexperiencesandlowertotalepisodecosts.

Recommendations:ElectiveJointReplacement
ThedesignelementrecommendationsreflecttheCEPWorkGroupsresearchandanalysisonarangeof
existingepisodepaymentinitiativesforjointreplacement(see AppendixC).SeeChapter2,Episode
PaymentDesignElements,forasummaryoftherecommendationsdescribedin moredetailbelow.

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1. EpisodeDefinition

Theepisodeisdefinedasanelectiveandappropriatetotalhip

ortotalkneereplacementduetoosteoarthritis.

Therecommendationsinthischapterarebasedondefiningtheepisodeasatotalhiportotalknee
replacementprocedure4thatisbothelectiveandappropriate.
Elective:Thereareanumberofreasonswhythisepisodeisdefinedaroundelectivetotalhipand
electivetotalkneereplacement.Comparedtolowerextremityjointreplacementduetofracture,
electivejointreplacementishighervolumeandmorepredictable.Focusingonelectivejoint
replacementthenprovidesahighervaluetargetthanfocusingonanepisodethatincludesfractures
andemergencyjointreplacement.Itisalsoamorecontrolledclinicalevent,inwhichtherearegreater
opportunitiesforpatientengagementandshareddecisionmaking.Inaddition,thepreoperativeand
postdischargecaretrajectoriesforelectivejointreplacementhaveanevidencebaseandarewell
standardized,whichcaneasethewayforwideadoptionofthisepisodemodel.Finally,anelective
procedurecreatestheopportunityforpatientsandproviderstohaveameaningfuldiscussionabout
whethertheprocedureistrulyappropriate,and/orwhethertherearealternativetreatmentsthatwould
bettersuitthepatientsgoalsandvalues.
Appropriate:Asnotedpreviously,jointreplacementisamongthemostcommoninpatientsurgeriesin
theUnitedStates,andsomeestimatethatthedemandforthisprocedurewillquadrupleby2030
(Ghomrawi,Schackman,&Mushlin,2012).Findingdataonhowmanyofthosejointreplacement
procedureswereelectiveandappropriate,however,isnotasstraightforward.Stakeholdersseejoint
replacementasaprimeopportunityforapplyingappropriatenesscriteriainthecourseofdetermining
whetherornotitshouldbeperformed,orwhetheralternative,lessinvasivetreatmentsarepreferredby
thepersonwithosteoarthritisthatcanachievesimilarorbetterfunctionaloutcomesatlowercosts.
Whenappropriatenesscriteriawereappliedinothercountries,studiesfoundthat20%to40%of
electivejointreplacementprocedureswereconsideredinappropriate,whenusingevidencebased
criteria(Quintanaetal.,2008;VanWalravenetal.,1996).Themodeldescribedhereisdesignedto
includeonlythosepatientsforwhomthedecisiontohaveanelectivejointreplacementisevidence
basedand,consistentwithpatientpreferencesandvalues.
Appropriatenesswillbedeterminedviaboththeuseofafunctionalstatusassessmenttoolanda
meaningful,validated,shareddecisionmakingprocess:
1. Evidencebasedfunctionalstatusassessment:Forapatienttobeincludedintheepisode,there
shouldbeevidencethatinadditiontoaclinicalassessment,aproviderusedastandardized,
validatedfunctionalstatusassessmenttooltodeterminethatthepatientisanappropriate

Theepisodedefinitiondoesnotincludepartialkneereplacementsorpartialhipreplacementduetotheirlow
volumeintheMedicarepopulation.Organizationsthatwanttopursueaddingtheseprocedurestotheepisode
shouldbeawarethatthecostisoftenhigherthanthecostfortotalreplacement,whichwillfactorintotheepisode
price.
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candidateforasurgicalprocedure,asopposedtobeingacandidateforlessinvasivecaresuch
asweightloss,activitymodifications,nonsteroidalantiinflammatorymedications,and
exercise.Theassessmentshouldlooknotonlyatthefunctionalcapabilityofapatientshipor
knee,butalsothepainthatthepatientisexperiencing,optimizationofmodifiableriskfactors
(suchasobesity,smoking,opioidtolerance,untreateddepressionoranxiety,and/orpoorly
controlleddiabetes).Itshouldalsoincludeanassessmentofwhethertheprocedurewill
meaningfullyaffectbothfunctionandpainlevels.
ExamplesofFunctionalStatusAssessmentTools
Someexamplesofprovideradministeredfunctionalstatustoolsare:

WesternOntarioandMcMasterUniversitiesArthritisIndex(WOMAC)score;

HipDisabilityandOsteoarthritisOutcomeScore(HOOSJR);

KneeInjuryandOsteoarthritisOutcomeScore(KOOSJR);

PatientReportingOutcomeMeasurementInformationSystem(PROMIS);and

VeteransRAND12itemHealthSurvey(VR12).

2. MeaningfulSharedDecisionMaking:Inadditiontoformalassessmentofpainandfunctional
status,theremustbeevidencethatthepatient,possiblywithafamilycaregiver,hasworked
throughadecisionaidthatishighlyratedaccordingtoInternationalPatientDecisionAids
Standards(IPDAS)withthesupportofadecisioncoachorahealtheducator,ifneeded(Ottawa
HospitalResearchInstitute,2014a).OneexampleofadecisionaidproviderisHealthwise,anot
forprofitcorporationthatprovidesconsumerhealthinformationtopatientsandcaregivers,
whichhashighlyrateddecisionaidsforbothhipandkneereplacement,asassessedbythe
IPDAS(OttawaHospitalResearchInstitute,2014b;OttawaHospitalResearchInstitute,2014c).
Healthwiseincludesinformationaboutcareoptionsincludingtheprosandconsofeachand
howtoconsiderapatientsvaluesandpreferencesastheyrelatetothecareoptions.

Inadditiontoaninitialshareddecisionmaking,thereshouldbeevidenceofongoing
engagementofpatientsinthediscussionofcareoptionsandsubsequentdecisionsrelatedto
thejointreplacementprocedure,ifoneisdeemedappropriate.Primarycareproviderscan
performthisrole,andindoingso,providegreatercontinuityofcaretotheirpatients.These
providerscouldalsosupportpatientsinreviewingcomparativequalityinformationaboutchoice
ofsurgeon,surgicalfacility,rehabservices,andhomehealthservicesatatimewhenthepatient
stillhavetimetomakeproactivedecisionsabouthisorhertreatment.
Ideally,bothoftheseprocessesshouldbeintegratedintodiscussionswithpatientsabout
appropriatenessofcare,andpatientsshouldbeabletoweighinwiththeirownvaluesaboutthe
potentialrisksandbenefitsofthetreatmentoptions.
TheImplementationResources(AppendixF)includesinformationonAppropriateUseCriteria
developedbyorganizationssuchastheAmericanAssociationofOrthopedicsurgeons.Providersand
payerswillneedtodeterminehowbesttoapplyappropriatenesscriteriawhileavoidingthepotential
forlimitingnecessarycare.

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Finally,whilefunctionalstatusassessmentsandcoaching/educationarecriticaltomakingtheinitial
determinationthataprocedureisnecessaryandappropriate,theseareactivitiesthatshouldoccur
acrossthecontinuumofcaretoensurethatcareishavingtheintendedeffectandthatpatients
preferencesarereflectedinthecourseofcare.

2. EpisodeTiming

Theepisodeshouldstartpreprocedure
(e.g.30days),andend90dayspostdischarge(Figure4)inordertoincludethemost
resourceintensiveaspectsofcareforelectivejointreplacementpatients.Accountability
forfunctionalimprovementandperformancemeasurementgoesbeyond90days.

Figure4:EpisodeTiming

StartandEndPoints
Optimally,thestartandendpointsshouldbeestablishedbasedonthetimewhenunwarranted(i.e.not
evidencebased)variationincarebeginsandendsandwhentheopportunitytoimpactqualityand
outcomesisgreatest(Figure4).Whiledefiningstartandendpointsisnecessary,incentivescanbe
createdforservicestobescheduledeitherbeforeorafterthedatesinordertoimprovepatient
outcomesanddecreasethecostsoftheepisode.Therefore,ananalysisofutilizationpatternsand
outcomesshouldbebuiltintothedataanalyticsandmonitoredfrequentlyinordertoensurethat
patientcareisnotinappropriatelyaffected.
EpisodeStartPoint:Theepisodeshouldbeginpreprocedure(asopposedtostartingatthepointof
procedure),inordertocreateanincentiveforreducingunnecessaryorduplicativeimagingandother
diagnostics.Thecriticalissuewhendeterminingtheepisodestartpointisensuringthatitprovidesan
appropriateamountoftimetoachievethisgoal,withoutcreatingperverseincentivestooverorunder
deliverappropriatepreoperativecare.Alternatively,theepisodedesigncouldincludecarethatisnot
directlyrelatedtotheprocedure.Basedonthedesignofcurrentinitiatives,areasonablestartingpoint
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maybe30dayspreprocedure.Operationally,thisrequirescreatingalookbackperiod,whichan
electiveprocedurebydefinitionmakesfeasible.
Animportantfactortoconsiderwhensettingthestartpointisthepatientpopulation.Olderadultsand
Medicarebeneficiariesmayneedadifferenttimewindowthantheiryoungercounterpartswhoare
coveredbycommercialinsurance.
EpisodeEndPoint:Thelengthoftheepisodeaftersurgeryisacriticaldecisionpoint.Thisisbecause
poorpostdischargecarecoordinationaroundauxiliaryservicessuchaspostacutecare,rehabilitative
treatment,homeandcommunitybasedservicesandsupports,andevendeliveryofmedicinescanbea
significantcontributortocostsandreducedpatientoutcomes.Basedontheprinciplethattheepisode
designshouldbepatientcentered,andacknowledgingthechallengespatientsexperienceduringthe
rehabilitationperiod,therecommendationisfortheepisodetoend90dayspostdischarge.Even
thoughcostsmaynotvaryasmuchinthelatterdaysoftheepisode,theriskofsignificantcomplications
continuesthroughoutthe90days;infact,formanypeople,therecuperationperiodoftenexceedsthat
timeperiod.
Currentmodelsfeatureendpointsthatvaryfrom30daysto90days.Thisrecommendationbalances
theabilityoftheaccountablepartytohavesomecontroloverthepatientscare(whichwouldsupporta
shorterepisode)withtherecognitionthatpatientscanbenefitenormouslyfromprofessionalsupportin
coordinatingclinicalandotherpostoperativeservicesduringrecovery,whichextendswellbeyond30
dayspostdischarge.Onefactortoconsiderindeterminingepisodelengthisthespecificityofthe
definitionoftheepisode,includingtheinclusionsorexclusions,asthemorenarrowlyitisdefined,the
morecomfortableproviderswillbewithalongerepisode.
Accountability:Qualitymeasurementmayincludedataforupto12monthspostdischarge,even
thoughtheepisodepaymentperiodends90dayspostdischarge.

3. PatientPopulation

Theepisodeshouldapplytothebroadestpossiblepoolofpatients,
usingriskandseverityadjustmenttoaccountforageandcomplexity.

Stakeholderviewsonwhichpatientsshouldbeeligiblefortheseepisodesmayvarysignificantly.Within
thecontextofelectivejointreplacement,thepatientpopulationtowhichtheepisodepaymentapplies
shouldbebroad.
Ideally,focusingonabroadpopulationwithinthecontextofelectivejointreplacementwillalso
motivateinnovationsincareandcarecoordinationthatwillbenefitthehighestriskpatients,whoare
alsohighestinresourceuse.Appropriatelyspecifiedriskandseverityadjustmentalgorithmsappliedto
theepisodepricearecriticaltothisrecommendationiftheepisodeistogainbuyinfromproviders.
Itmayalsobeusefultoenlistthesupportoftheprimarycareprovidertoensuretheproposedsurgery
episodeisintegratedwithinthecontextofthepatientsotherhealthconcerns.Itisalsovaluableto
engagethefamilyinshareddecisionmaking.

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Ifconcernsariseregardingtheappropriatenessdecision,anappealsprocessshouldbeestablishedfor
thosepatientswhosecircumstancesorriskcannotbeidentifiedthroughavailabledataandmightnot
otherwisebeeligible.Itisimportanttoacknowledgethatineligibilityfortheepisodedoesnot
necessarilymeanthepersonwouldnotreceivecare;theircarewouldsimplynotbeincludedinthe
episodepaymentinitiative.ThisdesignwillsupporttheLANsgoals,whileatthesametimediscouraging
providersfromcherrypickingthelowestriskpatients.Aflipsidetocherrypickingisthe
inappropriateselectionofcaseswhereconservativemanagementisamoreappropriatealternativeto
surgery.

4. Services

Allservicesneededbythepatientthatarerelatedtothejointreplacement
procedureshouldbecoveredbytheepisodeprice.

Stakeholderviewsonwhichservicesshouldbeincludedmayvarysignificantly.Payersmaywantto
definetheepisodemorebroadlytocaptureasmuchvariationand,thus,potentialefficienciesas
possible.Providers,ontheotherhand,mayprefermorenarrowlydefinedepisodessothatcareneeds
andtheassociatedcoststhatarecompletelyunrelatedtototalhiportotalkneereplacementdonot
weighintothetargetpriceorqualitymetricgoalsfortheepisode.Forexample,apatientwhoreceivesa
totalkneereplacementandrequiresacoronaryarterybypassgraft(CABG)procedurewithinthe90days
postjointreplacementdischargewindowshouldnothavethecostsoftheCABGassociatedwiththe
jointreplacementepisode.Toonarrowanepisodedefinition,however,mightmakethecostsof
implementationascomparedtothevaluecreatednotworththeeffort.
ThispaperdoesnotincludespecificMSDRGcodestoguidetheselectionofincludedservicebecause
thetworelevantDRGcodes(469and470)applytoalllowerextremityjointarthroplastyproceduresand
specifyonlythoseproceduresperformedinaninpatienthospitalsetting.Thus,usingthesecodesto
definetheservicesincludedintheepisodemay1)resultinincludingpatientsthatdonotmeetthe
patientpopulationorepisodedefinitioninthismodel;and2)excludeoutpatientprocedures,whichis
nottheintent.
IncludedServices:Theepisodepaymentshouldincludedeliveryofallservicesbilledinthedefinedtime
periodthatarerelatedtotheelectivejointreplacementprocedure. Mostinitiatives(AppendixC)include
allrelatedservicesthatoccurwithinthedefinedtimeframe,including,butnotlimitedtocostsinvolving
physicians,hospital/ambulatorysurgicalcenters,devices,labs,homehealthservices,skillednursing
facilities,physicaltherapy,andsometimespharmaceuticals.Includingpharmaceuticalsanddevicesin
theepisodepriceanddefinitionisimportantbecausetheycanbeanexpensiveportionofthebundle.
Therearetwoapproachestodeterminingwhichservicesareconsideredpartoftheepisode:
DefinetheExcludedServices:Oneapproachfocusesondefiningalistofexcludedservices.Forexample,
exclusionsfromtheComprehensiveCareforJointReplacement(CJR)Modelfinalruleinclude
hemophiliaclottingfactorsfurnishedduringtheinpatienthospitalization,andacutesurgeryfor
unrelatedconditions,suchasappendectomy(MedicareProgram;ComprehensiveCareforJoint
ReplacementPaymentModelforAcuteCareHospitalsFurnishingLowerExtremityJointReplacement
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Services,2015).TheseexcludedservicesareidentifiedbasedonMedicareSeverityDiagnosisRelated
Groups(MSDRGs)andInternationalClassificationofDiseasesClinicalModification(ICDCM)diagnosis
codes.Ifaninitiativefocusessolelyonexclusions,recognizethatthelistislikelytobeextremelylongto
avoidsituationswherebypatientsorprovidersdelayimportantservicesuntilaftertheepisodeends.For
example,ifpreventiveservicescannotbedelayedsimplybecausetheyareduetobeperformedduring
theepisodeofjointreplacementandtheyarenotspecificallyexcluded,thosecostswouldbeconsidered
partoftheepisodecosts.
DefinetheIncludedServices:Othermodelsrelyonveryspecificlistsofincludedservicesandexclude
anythingnotonthatlist.Definingwhatisincluded,ratherthanexcluded,mightbemoreeffectiveand
easiertomanage.Payersandprovidersshouldlooktoexistingresourcesthatprovideevidencebased
informationaboutserviceinclusionsandexclusions.
PatientswithMultipleConcurrentConditions:Onechallengeinestablishingserviceboundariesishow
todealwithcomplexpatientswithmultipleconcurrentconditions.Forexample,apatientwithdiabetes
andcoronaryarterydiseasewhoreceivesajointreplacementmayalsorequireadditionalservices
relatedtotheirchronicillnesswithinthe90dayepisodeperiod.Whilesomeofthoseservicesmay
clearlybeoutsidethescopeofthekneeorhipreplacement,others(e.g.,treatmentforapostopheart
attack)maybelessclear.
Thesignificantriseinjointreplacementsamongpatientswhoareobeseandhavecomorbidconditions
suchasdiabetesandheartdiseasemakesthisasignificantconcernforpayersandproviders.Whilerisk
adjustmentmayaddressthisinpart,itisnecessarytoincludesufficientaccountabilitywithinthe
episodesoastoappropriatelycareforcommoncomplicationssuchasmyocardialinfarction,infection,
deepveinthrombosis,etc.Thesearewithinthepurviewoftheaccountableentityiftheappropriate
involvementoftheprovidersresponsiblefortheongoingcareoftheseconditionsisobtained
throughoutthetimeframeoftheepisode.Forexample,thetightcontrolofdiabeteshasbeenshownto
decreasetheriskofthesesamecomplications.

5. PatientEngagement

Requireuseofshareddecisionmakingandpatientengagementtools,
transparencyofperformanceandthepaymentmodel,shared
careplanning,accesstofullhealthrecords,carecoordination,
andpatientreportedqualitymeasuresinpatientfacingmaterials

tomaximizeopportunitiestoengagepatientsandfamiliesinadvancing

highvaluecare,bothforthemselvesandoverall.

AsdetailedinRecommendation1(EpisodeDefinition)andRecommendation2(EpisodeTiming),the
episodepaymentmustbedesignedinawaythataddsvalueforpatientsandtheirfamiliesand
determinesthebestcourseofcare.Tosummarize,accountableentitiesmustprovide:

Evidencethataproviderusedastandardized,validatedfunctionalstatusassessmenttoolto
determinethatthepatientwasanappropriatecandidateforatotalhiporkneereplacement;and
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Evidencethatthepatient,possiblyalongwitha
familycaregiver,workedthroughahighquality
decisionaid,withadecisioncoachornurse
educator,asneededanddesired.

Inaddition,patientsandfamilycaregiversshouldbe
providedthefollowinginanonbiasedand
transparentmanner:
ComparativeProviderQualityInformation:
Patientsandfamilycaregiversshouldhaveaccessto
informationabouttheprocedurerelated
complicationratesofpossiblesurgeonsand
possibleacutecarefacilities;outcomessuchas
reductioninpain,gainsinfunctionalstatus,and
qualityoflife;andinformationonthequalityof
possiblepostacutecarefacilitiesandhomehealth
agencies.Patientsshouldreceivehelpshortlyafter
decidingtohaveaprocedureinidentifying
participatingsurgeons,facilities,andagencies,and
infindingandinterpretingrelevantinformation
aboutthem.Suchhelpshouldbeavailablethrough
clearlydesignatedpersonnelwithoutconflictsof
interest.Itisoptimalforthepatienttolearnabout,
visit,andassessthequalityandsuitabilityofpost
acutecareoptions,includinghomehealth,skilled
nursingfacilities,andinpatientrehabilitation
facilities,priortoadmissionforsurgery.Inaddition,
theaccountableentityshouldidentifyproviders
includedinthemodelandprovidethatlistto
patients.

DeployingSharedDecisionMakingToolsina
WaythatisMeaningfulforPatientsand
FamilyCaregivers
Meaningfulshareddecisionmakingrequires
bothhighqualitydecisionaidsandaprocess
thatsupportstheiruse.Thisprocesscanbe
describedviathefollowingsteps:Theseaids
supportprovidersandpatientsindiscussing
thefollowing:
1) Acknowledgingthatthereisadecisionto
bemade;
2) Explainingthattherearecareoptions,
andeachoptionhasadifferentsetofissues
toconsider;
3) Presentingthebestevidenceaboutthe
prosandconsofthecareoptions;and
4) Acknowledginghowpersonalvaluesand
preferencesmightalignwiththecare
options.
Thisconversationshouldbefollowedbya
subsequentopportunityforthepatientand
familycaregivertomeetwiththecare
providertogetanswerstoanyquestions,
decideabouttheoptimalpathforward,and
initiatesharedcareplanning.

ReimbursementTransparency:Patientsandfamilycaregiversneedtransparentinformationonhow
providersarebeingreimbursedinanepisodepaymentmodel;theimpactthatepisodepaymentmay
haveonthepatientscopayandcoinsuranceresponsibilitiesandothercostsharing;andthemannerin
whichcarewillbedelivered.
CoordinationAcrossCareSettings:Intheprivatesector,thismaymeanengagingwithpatientsand
familycaregiversaboutinoroutofnetworkpostacuteorfollowupcare.IntheMedicareFFS
program,thismayinvolvediscussionsrelatedtochoiceofpostacuteproviders,afterconfirmingthat
thepatientsstillhavefreedomofchoice.Regardlessofpayer,thisinvolvesprovidersandpatients
workingtogethertoidentifyparticipatingandaccessiblepostacutecareoptions,understandingtheir
qualityratings,andmakingawisechoice.Thisisacriticalpatientconversationasitmaybethecasethat
apatientwillnotwishtoseeaproviderthatiswithinaspecifiedpaymentarrangement.
SupportedCarePlanning:Providersshouldincorporatesharedcareplanningintothedeliveryofcare,
whichincludescollaborativeproviderpatientgoalsettingpriortotheprocedureandongoingdecision
makingandmonitoringusingdocumentedindividualizedcareplansthatareaccessibletobothpatient
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andproviders.Patientswithcomorbidconditionsthatmayaffecttheiroutcomeshouldbeencouraged
toengagetheirprimarycareproviderintheirdecisionmakingprocess.
AccesstoHealthCareInformation:Forpatientengagementtooccur,patients(and,asdesired,family
caregivers)shouldhavefullaccesstohealthrecordstohelpunderstandandmanagetheirconditionand
care.Thegoalistoprovideinfrastructureandsupportforgathering,storing,andusinghealthdata.One
exampleofatoolthatisprovidingaccesstothesedataisthesuccessfulOpenNotesproject,whichis
providingagrowingproportionofpatientstofullaccesstotheirelectronichealthrecords(Belletal.,
2015;Eschetal.,2016;Walker,Meltsner,&Delbanco,2015).

6. AccountableEntity

Theaccountableentityshouldbechosenbasedonreadinessto
reengineerchangeinthewaycareisdeliveredtothepatientandtoacceptrisk.
Inthismodel,theaccountableentitywilllikelyrequireadegreeofshared
accountability,giventhenumberofcliniciansworkingtocareforapatient.

OverallReadiness:Thequestionofreadinesstobothreengineerthecaredeliverymodelforthe
patient,andintheprocess,acceptthefinancialrisktheymightincur,iscentraltothedeterminationof
whatentityorentitiesshouldbeaccountable.Thereareanumberofkeyrequirementsneededfor
successregardlessofwhichentity(orentities)areheldaccountable(Table5).Payersshouldworkwith
theaccountableentitytoassesstheirreadiness,andpromotecollaborationtoallowformultiple
providerswithinanelectivetotaljointreplacementcareteamtosharetheriskandrewardinsucha
mannerthatallareengagedincreatingaseamless,efficient,patientcenteredcareprocess.Thisprocess
canrequireactiveparticipationacrossthecontinuumbyaligningincentivesacrosscontractsinthe
privatesector,becausethepayeroftenhascontractsdirectlywithproviders.Medicareallowsforfull
freedomofchoiceofproviderinFFS,andthespreadingofriskmaytaketheformofagainsharing
relationship.ThisisparticularlyimportantinarelationshipwherebytheprovidersarestillpaidaFFS
witharetrospectivereconciliation,becausetheaccountableentityhaslimitedabilitytoobtainbuyin
fromotherprovidersintheepisodewithoutdirectincentivesforthemtocollaborate.
FactorstoWeighinDeterminingReadinessforEpisodeAccountability:

Minimumvolumestandards;

Abilitytodeliver,orcontractfor,theentirebundleofservicestoberendered;

Demonstratedabilitytocarefortotaljointreplacementpatients;

Effectivedischargeplanningcapacities,includingsystemstoincluderehabilitationphysiciansand
extendersearlyinthedischargeplanningprocesstohelpinidentifyingthepropertrajectoryof
patientsandtheircare;

Abilitytomanagetransitionsorhandoffsfromonesettingtoanotherwhennecessary(e.g.entry,
transitions,anddischarge);

Abilitytotrackqualityindicatorsandpatientoutcomesacrossanarrayofservicesandsettings;
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Demonstrateddedicationofthehospital,physicians,nurses,therapists,andotherclinical
professionalstimetotheprograms;

Capacitytomonitorpatientclinicalstatusandcoordinatemedicalmanagementandreconciliation
aspatientsprogressacrossacuteandpostacutecaresettings;

Abilitytocoordinatewithothercommunityservicestofosterthepatientsindependence;

Necessaryfinancialsystemstoadministerpaymentacrossmultipleentities;and

Abilitytotoleratefinancialrisk,includingpostdischargeoutcomes,suchasreadmissions,and
understanditsownriskexposure.

SharedAccountabilityAcrossaCareTeam:Anidealdesignwouldallowforsharedaccountabilityacross
multipleprovidersrepresentingpreoperative,surgical,andpostacutecare(Figure5).Theseproviders
includenotjustorthopedicsurgeonsworkinginaninpatientsetting,butalsocaresettingssuchas
emergencydepartments,ambulatorysurgicalcenters(ASCs),outpatienthospitals,skillednursing
facilities(SNFs),inpatientrehabilitationfacilities(IRFs),andotherPostAcuteCareproviders.Theymay
alsoincludeotherclinicianssuchashospitalistsandtelehealthclinicians.Regardlessofwhichentityis
determinedtobeultimatelyaccountable,theremustberecognitionthereareanumberofkey
requirementsneededforsuccess.Payersshouldworkwiththeaccountableentitytoassessitsreadiness
to:1)promoteandsupportcoordinated,collaborativecare;and2)allowformultipleproviderswithina
jointreplacementcareteamtosharetheriskandrewardinsuchamannerthatallareengagedin
creatingaseamless,efficient,patientcenteredcareprocess.Itisusefultorecognizethatpostacute
careentitiesmaybesetuptomeetthesecriteria.5
Intheprivatesector,thepayeroftenhascontractsdirectlywithproviders.Thus,thisdesign,inwhich
thereisoneaccountableentitybutmultipleproviderentitiesshareriskand/orreward,willrequire
activecoordinationacrossprovidersservingallpartsofthecarecontinuum.Itwillalsorequirean
alignmentofincentivesbythepayerortheaccountableentityacrossprovidercontracts,toallwork
towardasharedsavingsandhighqualityperformancegoal.Inthepublicsector,withapayersuchas
MedicarethatallowsfortraditionalMedicarebeneficiariesfullfreedomofchoiceofproviderinFFS,the
riskspreadingmaytaketheformofagainsharingrelationshipamongproviderswhohavereceiveda
Medicarewaiverthatallowsthemtodoso.Thisisparticularlyimportantinarelationshipwherebythe
providersarestillpaidFFSwitharetrospectivereconciliation,becausetheaccountableentityhas
limitedabilitytoobtainbuyinfromotherprovidersintheepisodewithoutdirectincentivesforthemto
collaborate.

TheCMSBundledPaymentsforCareImprovement(BPCI)Initiativeincludestwomodels(Model2andModel3)
thatincludePostAcuteCare,withModel3definedashavingthePACproviderserveastheaccountableentity.
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Figure5:ExamplesofJointReplacementAccountableEntities,BasedonCareTeam

AbilitytoEngineerChange:Thepreprocedureorthopedicsurgeonmaybemostabletoeffectchange
inanelectivejointreplacementepisode,givenhisorherroleindeterminingappropriateness,and
engagingthepatientincareplanningandpostdischargePACdecisionmaking.However,assigning
accountabilitytotheorthopedicsurgeonmaynotbefeasibleinsomemarkets.Risklevelsmayvary
dependingontheattributesoftheaccountableentity.Whileitisimportantthatoneentitybethe
primaryaccountableparty,itisalsoimportantthatcareisprovidedusingateambasedapproach.
Payerscanusetheirnegotiationswithprovidersandusegainsharingandlosssharingtoenablea
systeminwhichallproviderswhotouchthepatientsharesomelevelofaccountability.Payerswillneed
toassesswhichproviderinagivenmarketcanactmosteffectivelyinachievingajointreplacement
episodepaymentinitiativesgoalsandestablishthatproviderastheaccountableentity.
Publicandprivatemodelsaremixed.Sometimesthehospitalistheaccountableentity,butsometimesit
isthephysicianpractice(oftentheorthopedicsurgeonorpractice).Inmanycases,thecliniciancanhave
thegreatestimpactoncareredesign,becauseestablishingaphysicianlevelchampioncaneasethe
episodesmanagementprocess.Thecliniciancanleadthedesignandimplementationofnewpatient
careprotocols;determinethebestprostheticdevices;andcommunicatewiththepatientspost
dischargeprovidermoreeasilythanthehospital.Further,thediscussionswithpatientsregarding
appropriatenessandexpectationsonfunctionalimprovementsaremosteffectiveifthephysiciansare
fullyengaged.
AbilitytoAcceptRisk:Somephysicianpracticesmayhavelessabilitytoassumedownsideriskthan
largerpracticesorotherbettercapitalizedproviders,suchashospitalsorhealthsystemsthatintegrate
hospitalandphysiciancare.Thislimitedabilityforphysicianpracticestotakeonriskcanbemitigatedby
limitingthelevelofriskassociatedwiththeepisode.Strategiesfordoingsoarediscussedinthenext
recommendation.
IntheCJRprogram(MedicareProgram;ComprehensiveCareforJointReplacementPaymentModelfor
AcuteCareHospitalsFurnishingLowerExtremityJointReplacementServices,2015),CMSdetermined
thatthehospitalincomparisontootherhealthcarefacilitiesisbestpositionedtomanagethecarein
aneffectivemanner.Thisisbasedontheideathathospitalshaveresourcestocoordinateandmanage
care,andhospitalstaffareinvolvedindischargeplanningandPACrecommendationsforrecovery.The
regulationsallowthehospitaltoopttoshareaportionofgainsorlosseswithotherprovidersthatare
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partofthedeliveryofcareforpatients,includingphysiciansorotherpostacuteproviders.IntheAcute
CareEpisodedemonstrationimplementedbyCMS,whilethehospitalwastheaccountableentity,itwas
consideredcriticaltogetthephysiciansinvolved.Inthatinitiative,hospitalswereabletoutilizegain
sharingtoengagephysicians.
SeetheChapter6,OperationalConsiderations,foradiscussionon two relatedissues.First,inthedata
infrastructuresectionisadiscussionofthestructuresnecessarytofacilitatecoordinationand
communicationacrossmembersofthecareteamandbetweencliniciansandpatients.Second,inthe
regulatoryenvironmentsection,isthediscussionofhowstatelawsmayaffecthowmuchriskproviders
areallowedtoincur.Forexample,somestateslawsandregulationsaresupportiveofhospitalstoserve
astheaccountableentity,ratherthanaphysicianorphysicianpractice.

7. PaymentFlow

Theuniquecircumstancesoftheepisodeinitiativewilldetermine
thepaymentflow.Thetwoprimaryoptionsare:
1) aprospectivelyestablishedpricethatispaidasonepaymenttothe
accountableentity;or2)upfrontFFSpaymenttoindividualproviders
withintheepisodewithretrospectivereconciliation

andapotentialforsharedsavings/losses.

Episodepaymentsaretypicallydispersedviaeitherprospectivepaymentorretrospectivereconciliation
(Figure6).
InProspectivePayment,paymentisprovidedfortheentireepisodeofcare,includingallservicesand
providers,andpaidtotheaccountableentitytosubsequentlypayeachproviderinturn.Thispayment
typicallyoccursaftertheepisodehasoccurredbutistermedprospective,asthepriceoftheepisodeis
establishedprospectivelybasedonwhatisdeemedtobeappropriatecarefortheepisode,andthe
savingsorlossesarenotsharedwiththepayertheyaresimplyafunctionofhowwelltheaccountable
entity(andtheproviderswithwhomitcoordinates)managetothepredeterminedprice.
InRetrospectiveReconciliation,individualprovidersareeachpaidonatypicalFFSbasis,andthenthere
isareconciliationbetweenthetargetepisodepriceandtheactualaverageepisodepriceafteraperiod
oftimeacrossalltheepisodesattributedtoaprovider.Aninitialreconciliationistypicallyconductedby
theendofthefirstquarterfollowinganepisodesend;afinalreconciliationistypicallyconductedwithin
sixmonthsoftheepisodescompletion.Forthisepisode,thistranslatestoAprilandJune.Basedona
specificformula,eithernegotiatedorestablishedbythepayer,theaccountableentitycanshareingains
and/orlosseswiththepayerand/orthepatient.Insomeinstances,gainsorlossesarealsoshared
amongprovidersintheepisodetoencouragecollaborationandcoordinationacrosssettings.These
typesofgainsharingarrangementsneedtobeconsideredwithintheparametersoffederallawsthat
mayimpacttheirdesign.SeeChapter6,OperationalConsiderations.

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Figure6:RetrospectiveReconciliationvs.ProspectivePayment

Prospectivepaymentisgenerallyfelttoprovideastrongerstimulusforcareredesignthroughgreater
coordinationofcareacrossprovidersandcaredeliverysettings,butitisonlyanoptioninsome
circumstances.Thesemayincludewhentheaccountableentityisahealthsystemthatalready
integratestheclinicianandfacilitypayment.However,retrospectivereconciliationissimplerto
administer,asitrequiresfewerchangesfromcurrentpracticewheretheprevailingmodelisanopen,
nonintegratedsystem.Inaddition,retrospectivereconciliationismoreprevalentincurrentepisode
initiatives,asitdoesnotrequireproviderstodevelopthecapacitytopayclaims;allowsforbetter
trackingoftheresourcesusedintheepisode;andcanbebuiltonanexistingpaymentsystem.
Asapracticalmatter,itmaybemoredifficulttoimplementasingleprospectivepaymentwhenmultiple
providersinvolvedindeliveringthecaredonotalreadyhavemechanismsforadministeringpayment
amongthemselves,suchasisthecaseinintegratedsystems.Increaseduseofprospectivepaymentcan
acceleratedevelopmentofvarioussupportingmechanismstoaidinthisprocess.
Nevertheless,prospectivepaymenthasadvantagesinthatitisaclearbreakfromlegacyFFSpayment
andmayencouragegreatercoordinationandinnovationinepisodepayment.Forexample,ina
prospectivepaymentinitiative,itmaybemorefeasibletobeflexibleindeliveringotherwiseuncovered,
valueaddedservices,ortodeliverservicesthatwhilecoveredundertraditionalFFSare
underutilized,suchascoordinationservicesthatlinkpatientsrecoveringfromanelectivejoint
replacementwithcommunitysupports,transportation,andotherwraparoundservicesthatare
instrumentaltoensuringpatientsreceivethepostacutecareandrehabilitationtherapythattheyneed
toachieveapositiveoutcome.
Currently,mostepisodeofcarepaymentmodelsflowthrougharetrospectivereconciliationsystemdue
tothechallengesinherentinoperationalizingprospectivepaymentintheprevailingopen,non
integratedhealthcareenvironment.Asnotedabove,retrospectivereconciliationismoreprevalentin
currentepisodeinitiatives,asitdoesnotrequireproviderstodevelopthecapacitytopayclaims,keeps
bettertrackoftheresourcesusedintheepisode(usingadministrativeclaims),andcanbebuiltona
legacypaymentsystem.However,therecommendationistoconsiderprospectivepaymentwhere
possible.ProspectivepaymentisaclearbreakfromlegacyFFSpaymentandmayserveasafoundation
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forgreaterinnovationinthequalityandcoordinatedcaredeliveryneededtomakeepisodepayment
successful.Further,ifaprospectivepaymentissharedamongproviders,itnegatestheincentivesofthe
FFSpaymentandcreatesimportantbuyinforcareredesign.
Prospectivepaymentmayworkbestinthecontextofahealthsystemthatalreadyintegrateshospital
andphysiciancare,asthemonetaryrelationshipamongthekeyprovidersisalreadyestablished.
However,evenunderprospectivepayment,itiscriticaltomaintainarecordofspecificservices
deliveredthatmaystillinvolvesomedegreeofFFSpayment.Thiswillallowforanalysesofbest
practicesthatleadtogreaterefficiencies,includinglowerlevelsofcomplicationsandfunctional
improvement.OnecautiononprospectivepaymentinaFFSMedicaidprogramisthattheremaybe
regulatorybarriersforoneproviderassigningpaymenttoanother.Legalcounselshouldbesoughtin
thisscenario.

8. EpisodePrice

Theepisodepriceshouldstrikeabalancebetweenproviderspecificandmulti
provider/regionalutilizationhistory.Thepriceshould

1) acknowledgeachievableefficienciesalreadygainedbypreviousinitiatives;
2) reflectalevelthatpotentialproviderparticipantsseeasfeasibletoattain;and3)
includethecostofservicesthathelpachievethegoalsofepisodepayment.
Theepisodepriceiscritical.Itultimatelydeterminesthemonetaryrewardsorpenaltiesthataprovider
mayexperience.Itcanalsoplayaroleincreatingtheincentivesthatdeterminehowcareisdelivered
andwhetherthegoalsoftheepisodeareprioritized.Thereareseveralkeyaspectsthatinteractinthe
establishmentoftheepisodeprice,describedbelow.
LookBackPeriodforHistoricalData:Theappropriatelookbackperiodforhistoricaldatashouldbeset
accordingtotwovariables:numberofcasesthatoccurred,andthenumberofyears.Forelectivejoint
replacement,atwoyearperiodshouldyieldasufficientnumberofcasesonwhichtodeterminea
reasonableepisodeprice.Severityadjustment(describedmorefullybelow)canbeemployedtoexplain
muchofthevariationincostsofcarethatarewithinareasonabledistancefromtheaveragecostwithin
thattimeperiod.Itshouldbenotedthatthereisnowaytocompletelyeliminatemeasurementerrorin
thisprocess,butitcanbereducedbyusingalargeenoughsamplesize;thus,therelianceonnumberof
casesmaybeprioritizedoverthenumberoflookbackyears.
Onechallengewithdefiningalookbackperiodbyyearsand/ornumberofcasesisthatthenumberof
yearsandcaseswillvarydependingonwhethertheepisodeisbroadlydefined(i.e.includesawider
rangeofservices)ormorenarrowlydefined(i.e.includesasmallerrangeofservices).Toaddressthis
challenge,implementersmaythinkaboutthelookbackforhistoricaldatawithinthecontextofsettinga
targetmarginoferror.Thismargincanbedefinedasafactorofthenumberofcases,andtheunderlying
distributionandvariabilityofepisodecosts.Amorebroadlydefinedepisodewillrequiremorecasesin
ordertoachieveareasonablemarginoferror,whileamorenarrowlydefinedepisodewillbeabletofall
withinthatmarginbyusingfewercases.
BalancingRegionalandProviderSpecificData:Oncethelookbackperiodisdetermined,thecostdata
shouldreflectamixofproviderandregionalclaimsexperience.Thegoalofincludingregional,rather
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thanmarketleveldataistoensurethatthereisenoughvariationinepisodecost.Thismixwillalso
ensurethattheestablishedepisodepricetakesintoconsiderationtheuniqueexperienceofthespecific
provider,andthatthegoalsaresetbasedonwhatisfeasibleintheregion.Riskadjustmentwillbe
neededduringthisprocesstoadjustfortheuniquecharacteristicsofthepopulationtheproviderserves.
Ifthepayerisanationalpayer,itmaybemoredifficulttoaddressspecificproviderissuesandwill
requireconsiderationoftheuseofnationalclaimsexperiencetoensureequityacrossregions.Over
time,asperformancebecomeslessvariable,itmaybeusefultolessentheproportionoftheepisode
lookbackperiodthatisbasedontheorganizationsspecificexperience.
RegionalCosts:Asnotedabove,usingregionallevelclaimsdataallowsthepayertotakeintoaccount
thecostsofmultipleproviderswithinaregion,reflectingthefactthatoneproviderscostsmaynotbe
fullyrepresentativeofwhatispossibleinthatregion.Italsoaddressesthevariabilitythatmayexistfora
providerwithalowvolumeofcases.However,theconcernwithusingregionalclaimsisthat,ifasa
whole,providersinthatregionhavealreadyachievedacertainlevelofefficiency,theymaybelessable
toachievefurthersavingsorwillachievelowersavings.Inessence,theseregions(ortheprovidersin
them)willarguethatanefficientregionwillbepunishedfortheirpreviousworktoachievethese
efficiencies.Ontheotherhand,iftheregion,onaverage,hasahigherperbundlecostthanother
regions(orspecificproviderswithintheregion),thepayermaynotachieveasgreatalevelofsavings
thaniftheepisodepricewastobesetatanationalorproviderspecificlevel.Insituationswherea
regionisnotlargeenoughtoreflectsufficientvariationacrossproviders,alargerregionmayneedtobe
defined.
ProviderCosts:Providerspecificcostsaretheactualcostsforthepreviouspatientsoftheprovidernow
responsibleforthepatientepisode.Forexample,ifahospitalisaccountable,theanalysiswouldbe
conductedusingthecurrentepisodedefinitionandapplyingittopatientswhoreceivedjoint
replacementsoverthelasttwoyears.Thechallengeisthatwhilethesecostsmaybeaccurateforagiven
institution,theymaybuildinalreadygainedefficienciesthatmakeitmoredifficultforanalready
efficientgroupofproviderstoachievesavingsorbuildininefficienciesthatlimitthesavingsforthe
payer.Anotherchallengeisinusingprovidercostsinawaythatdoesnotinhibittraditionallyhigh
performersfromcontinuingtostriveforexcellenceandimprovement.Onewaytoaddressthisistouse
multiprovidercostaverages,whichcancreateapayforperformancemodel,versusapayfor
improvementmodelwhichcanbenefitpoorperformersdisproportionately.
IncentivizeMoreEfficientLevelsofPractice:Inadditiontohistoricalproviderandregionleveldata,the
episodepriceshouldbebasedontheperformanceofthebetterperformersinaparticularmarket,such
thatallproviderscanseethattheepisodepriceandthequalitymetricperformancethresholdsare
feasibletoachieve.Ifaprovidersperformanceisalreadyatarelativelyefficientlevel,itwillneedtosee
somerewardforthatachievementatthesametimethatlowperformerswillhaveanincentiveto
improve.
Theepisodepricecanberevisedovertimetoensurecontinualimprovementbyboththemoreandless
efficientproviders.Inthisway,theepisodepriceautomaticallyintegratessavingsandsimultaneously
incentivizesacompressionofvariationincostandqualityacrossallproviders.Finally,theepisodeprice
shouldtakeintoaccountservicesthatarehistoricallyunderreimbursed,andthus,underused,butareof
highvaluetothepatient.Carecoordination,patientengagement,shareddecisionmaking,and
assessmentofpatientreportedpainandfunctionareexamplesofservicesthatcouldfallunderthis
category.

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OtherFactorsImpactingEpisodePrice
Therearemanyotherfactorsthatshouldbeusedindevelopingtheepisodeprice,thoughtheabilityto
dosowilldependontheavailabilityofdataandanalytictools.Forfurtherdiscussiononthistopic,
pleasereadthepaperonFinancialBenchmarking,clickhere.
Factorsimpactingpriceinclude:
SocioEconomicStatusofthePatientPopulation:Thereareanumberofsocioeconomicfactorsthat
haveasignificantimpactonapatientshealthstatuspriortothejointreplacementprocedure,accessto
care,andpostprocedurerehabilitationandfollowupcare.Theseincludeincome,healthliteracy,living
status(livingalone,livinginacommunitywithoutfamilyorothersupportsnearby),availabilityof
transportation(bothingeneral,andtocaresettings),andothers.Certainsocioeconomicfactorsmay
alignwithaspecificpayercategory,whetheritbeMedicareorcommercialpayers.
Publicvs.PrivatePayers:Therearedifferencesbetweenpublicandprivatepayersthatshouldbe
acknowledgedandreflectedintheepisodepricing.Inadditiontothesocioeconomicstatusofthe
patientpopulation,asdescribedabove,thereisalsoadifferenceinhowoverallpricingisset.Forprivate
commercialpayers,pricingisanelementofnegotiation;inthepublicpayerrealm,pricesaresetbythe
publicpayer.Eitherway,thiswillimpactthelevelatwhichtheepisodepriceisset,aswillthemarketin
whichthepayeroperates.Mostprivatesectorpayerswillneedtonegotiatewithprovidersonthe
episodeprice,particularlyifparticipationisvoluntary.Iftheinitiativerequiresparticipation,itmaybe
easiertoestablishanepisodeprice,asisthecasefortheCJR.
TrustedEmpiricalData:Onechallengeistheabilityforpayersandproviderstounderstandthevariation
inthecostsoftheepisodeacrosstheirregion.Determiningtheappropriatepricerequiresempiricaldata
fromatrustedsource.Theavailabilityofthesedatatoidentifytheopportunitiesforefficienciesis
criticaltothesuccessoftheseinitiatives.
EpisodePaymentFlow:Theepisodepricecanbesetretrospectivelyinanepisodemodelforwhich
retrospectivereconciliationistheselectedpaymentflow.Similarly,thepricecanbesetprospectivelyin
amodeldesignedaroundprospectivepayment.Thus,settingtheepisodepriceandthepaymentflow
shouldbepartofanintegratedprocess.
PatientandFamilyDefinitionsofValue:Informationonthetypesofservicesthataremostvaluedby
patientsandtheirfamiliesshouldbeconsideredindeterminingtheepisodeprice.Thisinformation
wouldnottypicallybecapturedviahistoricaldata,butratherviaengagementbetweenprovidersand
theirpatients,aswellasbetweenpurchasersandtheiremployees.
MultipleWaystoBuildinSavingsforEJREpisodes:Onecommercialbundledpaymentmodel,the
PROMETHEUSpaymentmodel,buildsinanassumptionofalowerlevelofcostsforcomplications
andreadmissionsandadjuststheepisodepriceaccordingly.Ontheotherhand,theoriginal
GeisingermodelsProvenCareTMwarrantystrategybuiltinanassumed50%decreasein
complicationsintoitswarrantyprice.Meanwhile,otherpayersbuildinsavings,regardlessof
whetherthecalculationisbasedonproviderorregionspecificestimatesordecreasesin
readmissionsorcomplications.CMSbuiltinasetdiscountfactorofthreepercentandallowedfor
theepisodepricefortheCJRtobesetusingamixofhospitalspecificandregionaldata,shiftingtoa
moreregionalapproachoverafiveyearperiod.Theprovidersperformanceonkeyqualitymetrics
canbeutilizedtolowerthediscountfactorifitsperformanceishighenough.
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9. TypeandLevelofRisk

Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.
Transitionperiodsandriskmitigationstrategiesshouldbe

usedtoencouragebroadproviderparticipationandsupportinclusion
ofasbroadapatientpopulationaspossible.

Thegoalwhensettinganepisodepriceshouldbeto
incorporatebothupsiderewardanddownsiderisk.Absent
downsiderisk(wheretheactualcostsofcareexceedthetarget
episodeprice),theaccountableentityandotherproviders
involvedhavelessincentivetomakethenecessarychangesin
howcareisdeliveredtocreateefficienciesandimprove
patientoutcomes.Further,increasesinthecostofcarefrom
yeartoyearoftennegatethebenefitsofupsidesharingof
savings,particularlywhentheepisodepriceisbasedon
historicdata.However,takingondownsideriskmaybe
difficultforsmallerproviders,includingmanyphysician
practices,thatarealsothemostabletomakethenecessary
changesinajointreplacementepisodeofcare.
Toaddresstheseconcerns,payerscanutilizestrategiestolimit
thatriskortotransition(phasein)thedownsideriskovertime.
Thisisparticularlyimportantiftheinitiativeisvoluntaryand
participationwouldbelimitedabsenttheoptionforupside
rewardonly.Decisionsabouttype,level,andtimingofupside
rewardanddownsideriskillustratetensionsbetweenpayers
andproviders:certainriskarrangementsmaybemore
acceptabletopayersthantoproviders,andviceversa.
Consequently,intheprivatemarket,thesefactorsbecome
partoftheongoingnegotiationsamongnetworkparticipants
andpayers.Regardlessofthemechanismusedtolimitrisk,itis
criticalthatthemethodologyfordevelopingthatmechanism
betransparent,aswellasmodifiable,dependingonthetiming
oftheprocedure.

SafetyNetProvidersandRisk
Aprimarygoalindesigningany
alternativepaymentmodel
arrangementisguardingagainst
unintendedconsequences.Inepisode
paymentforelectivejoint
replacement,theunintended
consequencethatconcernsall
providersbutperhapssafetynet
providersmostofallisthepotential
fordecreasedaccesstocarefor
patientswithpoorhealthstatus,which
putsthematincreasedriskforpoor
outcomes.Thismaybecorrelatedwith
lowersocioeconomicstatusifthe
providerfeelsthatitwillnotbe
possibletoprovidethefullcontinuum
ofcareandachievepositiveoutcomes
withintheepisodeprice.Safetynet
providersinparticularmayneedtime
todevelopadequatereportingand
staffinginfrastructure;andbuild
relationshipsacrosshistoricallysiloed
organizationsinordertofeelprepared
totakeontheriskinanepisode
paymentmodel.

MechanismsforLimitingRisk:Thelevelatwhichthoserisk
limitsaresetisacriticaldesignelement.Thereareanumberofissuestoconsider,suchaswhetherthe
accountableentitywillberequiredtopaythefulldifferencebacktothepayerbetweentheestablished
episodepriceandtheactualepisodecostsorwhetherlimitswillbeestablished.Limitsareespecially
importantconsideringthataproviderisoftenalsoaccountableforcareprovidedbyseveralother
providersacrosstheepisode.WhattheaccountableentityispaidthroughFFSpaymentistypicallynot
sufficientforthemtopaybackapayerifthecostsovertheepisodepriceareduetohigherthan
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expectedutilizationofotherprovidersservicesacrosstheepisode.Therefore,followingarestrategies
usedbyvariousinitiativestolimitriskinanepisodepayment:
RiskAdjustment:Riskadjustingtheepisodeprice,basedontheseveritywithinthepopulationinthe
electivejointreplacementbundle,isoneriskmitigationstrategy.Thereareavarietyofapproachesto
capturingpatientcharacteristics,diseasestatus,andotherparametersthatpredictepisode
expenditures.Forexample,theHealthCareIncentivesImprovementInstitutes(HCI3)evidencebased
caserates(HealthCareIncentivesImprovementInstitute,[n.d.])createavarietyofpatientspecific
episodesthatrecalibratebasedonvariouspatientspecificseverityfactors.Anotherexample,the
MedicarePaymentAdvisoryCommission,initsanalysisofbundling,utilizedvariousriskadjustment
tools,6includingmarkersoffunctionalstatusandcomorbidities,toadjusttheunderlyingepisodefor
theiranalysis.Forfurtherdiscussiononthistopic,pleasereadthepaperonFinancialBenchmarking,
clickhere.
StopLossCaps,RiskCorridors,andCapitalRequirements:Otheroptionsforlimitingthelevelofrisk
include:Limitsatboththeindividualandaggregatelevelsthatcouldbeincludedasstoplossinsurance;
riskcorridorsthatlimitexposureandgains(CJRincludesarampupoftheexposurefromanupperlimit
of5%ofthetargetpriceto20%ofthetargetpricebyyearfive(5)ofthemodel);andsomelevelof
capitalrequirementstocoverthelosses.Anotherconsiderationmaybetolimittheriskforanyentityto
someportionoftheoverallcostsoftheepisodebasedontheaccountableentitysroleintheepisode.
InteractionBetweenRiskMitigationStrategies:Illustratingtheinteractionbetweenriskadjusting
theepisodepriceandotherriskmitigationstrategies,foroneexistingjointreplacementepisode
paymentinitiative,apayerdecidednottoriskadjusttheprice,but,instead,establishedarisk
corridorthatcappedexposureat115%oftheepisodeprice.Thismethodlimitsproviderexposure,
avoidsthecomplexityofriskadjusting,andprovidesasettarget.

http://www.medpac.gov/documents/contractorreports/sept13_episodebundle_contractor.pdf?sfvrsn=0
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10. QualityMetrics

Prioritizeuseofmetricsthatcapturethegoalsoftheepisode,includingoutcome
metrics,particularlypatientreportedoutcomeandfunctionalstatusmeasures;use
qualityscorecardstotrackperformanceonqualityandinformdecisionsrelatedto
payment;andusequalityinformationandothersupportstocommunicatewith,and
engagepatientsandotherstakeholders.

Episodepaymentencouragesbettercommunicationandcoordinationofcareacrossproviders.Thisputs
thepatientatthecenterofthecareacrosssettingsandhelpsachievethegoalofimprovingquality,
providingpositivepatientexperiencesandpatientoutcomes,anddoingitallwithinadefinedpriceto
reduceunnecessarycare.
Qualitymeasurementiscriticaltoachievingallofthesegoals.Qualitymeasuresmaybeusedtohold
providersaccountableforthequalityofcarebeinggiven,thelevelofresourceuse,andapatients
experiencewiththecare.Accountabilityrequirestheuseofprocessmeasuresaswellasoutcome
measures(clinicalandpatientreported).Italsorequiresmeasuresthatreflectcareacrosssettingsas
wellaswithinindividualprovidersettings.Patientsneedproviderspecificperformancescorestoassist
themwithselectingindividualproviders,andprovidersneedtoknowthatpatientsareexperiencing
positiveoutcomesacrossallsettingswithintheepisode.
TheCEPWorkGrouprecommendsusingPatientReportedOutcomeMeasures(PROMs)andmeasures
offunctionalstatuspreandpostprocedureforaccountabilitypurposes,andadditionalclinicaloutcome
measuresshouldbeconsideredforbothaccountabilityandpayment.
Inselectingthemetricsforanepisodepaymentmodel,itisimportanttorecognizethepreferencefor
alignmentofmeasuresacrossprograms,useofnationallyendorsedmeasures,andalimited,tightsetof
measureswithalowburdenofcollection.TheCEPWorkGroupsupportstheseprincipleswheneverthey
canbemetwithmeasuresthatincentpriorityopportunitiesforimprovingelectivejointreplacement
care.Ameasurethatmeetsthesecriteriawithoutthepotentialforclearbenefitsforpatientswouldnot
befitforthispurposeandisnotrecommended.TheWorkGroupisnotincludingrecommendationsfor
specificqualitymetricsatthistime.
Measuringandtrackingperformanceonqualityarecriticalforthesuccessofclinicalepisodepayment.
Measuresofqualitymustbeidentified,andthemannerinwhichinformationontheperformanceon
qualitywillbeusedmustbedefined.Todosorequires:

Selectingclinicalandpatientreportedoutcomemeasures,andfunctionalstatusmeasurestotrack
providerperformanceforservicesdeliveredwithintheepisodetoensurethatthefiscalsavings
incentivesdonotincentivizelowerqualitycarebutimprovequality;

Creatingaqualityscorecardwithperformancethresholdsorbenchmarksagainstwhich
performanceisassessedandusedtoinformpayment;and

Usingqualitymetricsforcommunicatinginformationtoconsumersandpatientsinawaythatis
meaningfulandsupportspatientengagement.
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PrioritizeUseofOutcomeMeasures(ClinicalandPatientReported),andFunctionalStatusMeasures
Definingqualitymetricsforepisodescanbechallenging.Manyqualitymeasurementmetricsare
designedformeasuringthequalityofcareinasinglesettingofcareandnotforobservingqualityover
multiplesettings.Forexample,withhipandkneereplacement,complicationsinahospitaldonot
measurewhatmayhavehappenedinapostacutesettingwheretheimprovementinfunctioningisa
primarygoal.Anotherissueisthatsomemetricsweredesignedforbroadertopics,suchaspatient
experiencesurveysofahospitalexperience,andmaynotbedesignedtocapturekeyattributesofthe
patientexperiencespecifictojointreplacementepisodesthatoccurovertimeandovermultiple
settingsandproviders.
Therearemetricsavailabletodayformeasuringthequalityofthesurgery,aspectsofthepatient
experience,andtoassesspainandfunctioningpreandpostprocedure(asdescribedin
Recommendation1,EpisodeDefinition).Patientexperiencesurveymeasuresshouldincludequestions
aboutpatientsexperiencewithpainandpainmanagement;functionalstatusassessmentsshould
includemeasuresofambulatoryfunction,andshouldbeconductedimmediatelypostprocedureandat
sixmonthintervalsthroughthedurationofthe12monthqualitymeasurementcycle.
Thereisnotastandardnumberofmeasuresthatshouldormustbeusedtosupportelectivejoint
replacementepisodepayment.Theprevailingwisdomistoseektouselessmeasures,butmakethose
measuresmorepowerfulintermsofhowmuchinformationtheyimpartaboutthecaredelivered.
Examplesincludestandardizedandconsensusbasedmeasuresofcomplicationratesandhospital
readmissions,whichcanprovideinformationabouttherelationshipbetweenreducingcostsofcareand
theeffectsonquality.Standardizedmeasuresofcomplicationsandreadmissionsarealignedwiththe
goalsforlowercostsasthelowertheratesofcomplicationsandreadmissions,thelowerthecostsof
theepisode.
Finally,alloutcomemeasuresusedtodeterminepaymentorreportedtopatientsmustbeaccurately
riskadjustedtoaccountforarangeofcomplexityinthepatientmix.Inconsideringwhichmeasuresto
implement,oneresourceistheOrthopedicMeasuresCoreSet,Version1.0(Table5),developedbythe
CoreQualityMeasuresCollaborative(CQMC)isnotmeanttobeanexhaustivelistofwhatisavailable.
Rather,itisacoresetofmeasuresdevelopedbyamultistakeholdereffortalignedatimplementation
byprivateandpublicpayers.

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Table5:CQMCConsensusCoreSet:OrthopedicMeasures,Version1.0

ConsensusCoreSet:
OrthopedicMeasures,Version1.07

Hospitallevelriskstandardizedcomplicationrate(RSCR)followingelectiveprimarytotalhip
arthroplasty(THA)and/ortotalkneearthroplasty(TKA)

Hospitallevel30day,allcauseriskstandardizedreadmissionrate(RSRR)followingelective
primaryTHA

SurgicalCareConsumerAssessmentofHealthcareProvidersandSystems(CAHPS):

Informationtohelpyouprepareforsurgery;

Howwellsurgeoncommunicateswithpatientsbeforesurgery;

Surgeonsattentivenessondayofsurgery;

Informationtohelpyourecoverfromsurgery;

Howwellsurgeoncommunicateswithpatientsaftersurgery;

Helpful,courteous,andrespectfulstaffatsurgeonsoffice;and

Ratingofsurgeon.

Source:CoreQualityMeasuresCollaborative;https://www.cms.gov/Medicare/QualityInitiativesPatient
AssessmentInstruments/QualityMeasures/CoreMeasures.html.

PatientExperienceofCare:Giventhecentralroleofcarecoordinationtoepisodepayment,payersuse
patientexperiencesurveystoassesswhetherpatientproviderinteractionsaresupportingthegoalsof
thepaymentinitiative.Forexample,theCJRinitiativeplanstoutilizetheHospitalConsumerAssessment
ofHealthcareProvidersandSystems(HCAHPS)(CentersforMedicare&MedicaidServices,2014)
patientexperiencesurveyforthispurpose.SurgicalCAHPS(SCAHPS),whichisdesignedforsurgical
episodes,ismorespecifictothepresentcontextandisincludedintheCQMCsorthopediccoreset
(CentersforMedicare&MedicaidServices,2016).
PROMs:Patientreportedoutcomes,particularlythoserelatedtofunctioningandpain,arecriticalin
electivejointreplacementepisodesbecausethesearethetwokeyproblemstheproceduresare
designedtosolve.Functioningandpainshouldbemeasuredbothpreandpostprocedure.Giventhata
patientassessmentshouldbedoneasarequirementforapatienttobeincludedinanepisodepayment
initiative,thesametoolshouldbeusedpriortotheprocedureandatdefinedintervalsafterthe
proceduretoensurestandardizationandmeasureimprovement.Severalassessmentinstrumentsare
utilizedinpostacutesettingsthatincludethesetypesofitemsandcanbeevaluatedtodeterminetheir
utilityinjointreplacementepisodepayment.Atthistime,theCEPWorkGrouprecommendsthata
patientschangeinfunctionalstatusshouldnotaffectpayment,ratherpaymentshouldbebasedonthe
useofthesepreandpostprocedureassessmenttool).

7
TheCQMCiscurrentlyoverseeingaworkgrouponPatientReportedOutcomeandPatientExperiencemeasures,
whichisreviewingthefollowingmeasuresrelatedtohipandkneereplacement.
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Aspartofthiswork,theCQMCisreviewingNQFmeasures0422(Functionalstatus:kneeimpairments,
usingFocusonTherapeuticOutcomeskneePROM)and0423(Functionalstatus:hipimpairments,using
FocusonTherapeuticOutcomeshipPROM).TheCQMCworkgroupisalsoreviewingNQF2653:Average
changeinfunctionalstatusfollowingtotalkneereplacementsurgery,usingtheOxfordKneeScore.
QualityScorecards
Mostepisodepaymentinitiativesuseaqualityscorecardwithdefinedthresholdsthataprovidermust
meetorexceedinordertoreceiveeitherthefullreimbursementforanepisodeorthefullshared
savingspossible.However,decisionsonwherethosethresholdsaresetorhowtheyareusedshouldbe
uptothepayerandprovidertonegotiate(thisappliestothecommercialmarket;seebelowfor
comparisonwiththepublicsector).Someinitiativesvarythelevelofsharedsavingsbasedon
performanceonthemetrics,whileothersalsouseminimumperformancelevelsasathresholdfor
receivinganyportionofthesavings.Issuesthatmustbeconsideredwhendevelopingqualityscorecard
thresholdsinclude:
CollectingSufficientData:Itisimportanttocollectsufficientdatatoinformthethresholdlevels.Thisis
ofparticularconcernwhenitcomestousingmeasuressuchasafunctionalstatustool.Sinceuseof
thesetoolsisrelativelyrecent,theremaynotbeenoughinformationonwherethethresholdshouldbe
set.
DrivingQualityandPatientSafetyImprovement:Whileintheinitialyearsofepisodepaymentthe
thresholdsmaybesettoallowforthegreatestopportunityforsharingsavings,thegoalshouldbetoset
thresholdsatapointthatincentivizesinnovationincareimprovementovertime,whichultimatelywill
drivequalityandpatientsafetyimprovement.
LackofAlignment:Theremaynotbealignmentbetweenpublicsectorandcommercialsectorepisode
paymentmodelswhenitcomestoaqualityscorecarddesign.Commercialpayershaveadifferentability
tonegotiatepaymentrelatedtoperformancewiththeirprovidersthanCMSorthestates.Inaddition,
thethresholdlevelsmayvarygiventhedifferenceintheirpopulations,whichmaymakealignment
acrosssectorschallenging.However,effortssuchastheCQMC,whichrepresentscollaborationamong
CMS,AHIP,andtheNationalQualityForum,areseekingtoaddressthisissue.
Notethatqualitymeasuresareneededforuseinpaymentandforconsumerinformation;however,one
concernisthatprovidersmaynotbeaswillingtotakeonpatientsatriskforpooroutcomesifthese
typesofoutcomemeasuresareusedintandemwithpayment.Anotherconcerniswhetherstakeholders
haveconfidenceinthequalityofthemetricitself.
QualityInformationtoCommunicateandEngagewithPatients
Inadditiontousinginformationonqualitytodeterminepayment,itisimportantforotherstakeholders
tohaveaccesstodataonquality.Tobeinformedontheoutcomesacrosssettings,patientsneedquality
data(ideallypriortomakingthejointreplacementproceduredecision)aboutthephysicians,surgeons,
hospital,andpostacutecareproviders,particularlyiftheyhaveachoiceofproviderteamsand/or
settingsinwhichtoreceivecare.Currently,therearegapsintheavailabilityofsuchdata,aswellasa
lackofresearchontheextenttowhichconsumers(orpayers)findsuchinformationuseful.
Tomakeoptimaluseofavailablecomparativequalityinformation,consumersshouldhaveaccessto
personnelwhocanhelpthemidentifyandinterpretinformationrelevanttotheircircumstances,and
whoarenotundulyconflicted,allowingthemtoprovidehelpful,disinterestedadviceand
recommendationstothepatient.
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Employersandpurchasersneedtomakedataonqualityavailabletoemployeestosupporttheiruseof
providersthatofferbundledpaymentforjointreplacement.Specifically,employeesneedtounderstand
thebundleandwhattheirroleisinreceivinghighqualitycare.
Primarycareprovidershopingtoenterintobundledpaymentcontractswillwantdataaboutspecialty
physicianqualityperformanceinordertodeterminewhichbundledarrangementswouldbemost
beneficialtotheirpatientpopulation.
Finally,episodepaymentdesignmustbuildinthecapacitytocollect,analyze,andprovidedataand
supportpatientsinidentifyingandinterpretingthisinformation.Itisimportant,therefore,toestablish
crosscuttingeffortstodefinemetricsandsystemsfordatacollectionandanalysis.Butitisasignificant
burdenforeachinitiativetodefineitsownmetrics,collectionsystem,andscorecard.Consequently,one
placetolookwouldbetheCQMCprocessfordefiningmetricsandtheuseofexistingreporting
mechanisms,suchasHospitalCompare,PhysicianCompare,NursingHomeCompare,andHomeHealth
Compare,whichproviderelevantinformationonthequalityoftheircareonhipandkneereplacements
andrehabilitativeservices.Clinicalregistriesalsohaveexperiencewithcollectingandanalyzingrichdata
oncomplicationsandotheroutcomesforjointreplacement.Broadereffortsareneededtobuildthe
necessaryinfrastructureformeaningfuldevelopmentand useofqualityperformance information,and
buildingthesesystemsisoneofthekeychallengesdiscussedintheOperational Considerationssection
ofthisWhitePaper.

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Chapter4:MaternityCare
Background
Pregnancyandchildbirtharepivotaleventsinawomanslife,framedbyboththeoverallcare
experienceandtheactualbirthevent.Duringpregnancy,womenareconcernedwithmanythings,
includingthehealthydevelopmentofthebaby,thelaborandbirthexperience,andhowtheywilltake
careofthemselvesandtheirnewbornspostpartum.Interactionswiththehealthcaresystemduringthis
timecreateopportunitiestoaddressandallaytheseconcernsbylayingastrongfoundationforthe
ongoinghealthofthewoman,herbaby,andherfamilyasawhole.Oftenprenatalcare,laborandbirth,
andpostpartumcareareviewedanddeliveredasthreedistinctperiods.However,byviewingthemas
threephaseswithinoneepisode,thereisapotentialforincentivizingthetypesofinteractionsandcare
deliverythatsupportpositiveoutcomes.
Positiveoutcomesformaternitycarecanbedefinedandachievedinavarietyofways,suchas:

Agreaterpercentageofappropriatevaginalbirths;

Agreaterpercentageoffulltermbabiesbornathealthyweights;

Strongrecoveriesforwomen;and

Healthystartsforthebabies.

Thoughtfulepisodepaymentseekstoachievetheseoutcomesataloweroverallcosttothesystem,and
atalowercosttowomenandfamilies.TheWorkGroupsrecommendationsprovideguidanceonhow
toachievethisgoalwithoutbecomingoverlyprescriptiveabouttheexactmechanismsfordoingso.
Inmaternitycaretoday,thereareavarietyofpaymentmechanisms.Paymentoftenincludesaglobal
feeforprofessionalservicesforprenatalcare,andthemanagementofthelaborandbirth.Itwill
sometimesalsoincludepostpartumcare.Facilityfeesfortheactualbirtharetypicallypaidseparately,
withhigherfeesintheeventofabirthbycesareansection.Therearealsoseparatefacilityand
professionalfeesforthenewborn.Thesedifferentpaymentmechanismsareoftenassociatedwith
overuseofhighcostinterventionsandunderuseoflowcostinterventions,whichleadstolessthan
desirableoutcomesforwomenandtheirbabies,despitethefactthatthematernitypopulationis
generallyhealthy.ItisalsoimportanttonotethatmaternalmortalityintheUnitedStateshasrisenover
thepast30years(CentersforDiseaseControlandPrevention,2016).Byprovidingincentivesforthe
provisionofhighervaluepractices,andforcarecoordinationacrossthecontinuumofservicesand
providers,episodepaymentcanpotentiallyhaveasignificantimpactonboththeshortandlongterm
healthofawomanandherbaby,andonthehealthofAmericansociety.
ChildbirthisthemostcommonreasonforhospitalizationintheUnitedStates.In2009,combined
maternalandnewbornstaysrepresented23%ofallhospitalstays(AgencyforHealthcareResearchand
Quality,2011).AccordingtoHealthcareCostandUtilizationProject(HCUP)data,whilechargesbilledby
hospitalsrepresentasignificantoverestimateofactualpayment,suchchargestotaled$127billionin
2013(actualpaymentsareroughlyhalfofbilledcharges).Thesechargesdonotincludeprofessionalfees
orothersettingsofcareacrosstheepisode.Inaddition,hospitalbilledchargesincreasedmorethan
90%between2003and2013(AgencyforHealthcareResearchandQuality,2003;AgencyforHealthcare
ResearchandQuality,2013).

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AstudybyTruvenAnalyticsshowsthecostofbirthvariessignificantlybypayer,typeofbirth(vaginalor
cesareansection),andsettingwherethebirthoccurs(seeTable6).In2013,theaveragetotalmaternal
newbornpaymentsforcesareanbirths,includingallfacilityandproviderfeesforprenatal,laborand
delivery,andpostpartum/newborncare,was$27,866foracommercialpayerand$13,590forMedicaid.
Forbothpayertypes,totalpaymentsforcesareanbirthswereroughly50%higherthanforvaginal
births.Oneofthereasonsthatcesareanbirthcostsmoreisthatthereare50%higherneonatalintensive
careunit(NICU)paymentsassociatedwiththesesurgeries,comparedtothepercentageofvaginalbirths
requiringNICUstays.Further,thefactthatwomenwhoexperienceacesareanonceoftenhaverepeat
additionalcesareansaddingtosystemcosts.
Table6:CostsandDisparitiesinMaternityCare

Volume(HCUP2013)*
Medicare,Other,or
UninsuredAccounted
fortheRemainder
PaymentVariationby
PayerandTypeof
Birth(Truven,2010)

CommercialMarket
2,012,584births(48.99%)

Medicaid
1,811,759births(44.10%)

Vaginal:$18,329
Cesarean:$27,866

Vaginal:$9,131
Cesarean:$13,590

Significant
Opportunitiesfor
ImprovedOutcomes

Reducecesareanrates:Currentaverageofcesareanis32.2%,up60%
fromthemostrecentlowof20.7%in1996(Osterman&Martin,
2013).WHOdatafindthatcesareanrateshigherthan10%arenot
associatedwithfurtherreductionsininfantormaternalmortality
(WorldHealthOrganization,2015).
Reducepretermrates:9.57%ofbirthsarepreterm.TheAmerican
CollegeofObstetriciansandGynecologists(ACOG)recommendsno
earlybirthsunlessmedicallyindicated(Hamiltonetal.,2015).
Increaseinbirthsoccurringinthehighestvaluesetting:Vaginalbirths
are50%lesscostlyinbirthcentersthaninhospitals(Hamiltonetal.,
2015).
Reduceinfantmortalityrates:InfantmortalityishigherintheUnited
Statesthanin38othercountries(WorldHealthOrganization,2014).
ReducematernalmortalityrateintheUnitedStates,whichhas
doubledsince1987(WorldHealthOrganization,2014).
Reduceracial/ethnicdisparities:Theprevalenceofpretermbirths
fornonHispanicwhiteis8.91%,nonHispanicblackis13.23%,and
Hispanicsis9.03%,withadditionalsignificantdisparitiesininfant
mortalityandlowbirthweightbabies(Matthews&MacDorman,
2013).

Thesettinginwhichawomangivesbirthalsoaffectsthecost,aswellasthetypeofdelivery.The
averagenationalcesareanrateintheUnitedStatesiscurrently32.2%(Matthews&MacDorman,2013;
WorldHealthOrganization,2015).Justaswithothersurgicalprocedures,thereissignificant,non
clinicallysupportedvariationincesareanratesacrosshospitals.Evenhospitalsinthesamecityshow
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widevariation.Forexample,JerseyCityMedicalCenter,nearNewark,N.J.,reporteda35%cesarean
sectionrateforlowriskwomen,comparedtoa19%rateatTrinitasRegionalMedicalCenterinnearby
Elizabeth,N.J.(Haelle,2016).InCalifornia,ratesvariedfrom18%inonehospitaltomorethan50%in
another,accordingtoarecentstudy(Mainetal.,2011).HealthyPeople2020callsforareductionin
nationwidecesareanratesforlowriskwomento23.9%by2020.
Forwomenwhochooseamidwifeand/orabirthcenterfortheirprimarycareproviderandbirth
setting,respectively,thecostsaresignificantlylessthaninahospital.Ofcourse,partofthisisduetothe
factthatbirthcentersdonotprovidecesareansectionprocedures.Thereareoccasionswhenawoman
choosesamidwifetomanageprenatalcareandabirthcenterforlaborandbirth,butultimatelydelivers
inahospitalduetocomplications.Thecostsinthisscenarioarestilllowerforvaginalbirthifamidwife
managedtheprenatalcareandsubsequentlymanagesthehospitalbirth(Howelletal.,2014).Theuse
ofcommunitybasedsettings,suchasbirthcentersandhomebirthsisgrowing.In2014,18,219babies
wereborninbirthcenterswhileanother38,094babieswerebornathome(MacDorman,Matthews,&
Declercq,2014).However,thevastmajorityofbirthsintheU.S.98.6%stilltakeplaceinahospital
setting(Hamiltonetal.,2015).
Thesedatademonstratethattoooftentheresourcesspentonmaternitycareservicesarenotleadingto
thehighestvaluebirthcare.ThefactthattheUnitedStateshasahigherrateofinfantmortalitythan38
othercountriesandalowersuccessfulbreastfeedingratethan98othercountriesreflectsthis(World
Healthorganization,2014).Itisalsoreflectedinthe9.57%pretermbirthratein2014.Finally,thereare
significantracialandethnicdisparitiesinbirthoutcomes.NonHispanicblackbabiesareatmorethan
twicetheriskofdyingatbirthcomparedtononHispanicwhitebabies(CentersforDiseaseControland
Prevention&HealthResourcesandServicesAdministration,2012).
Thegoodnewsisthatevidencebasedcarepracticescandeliverhigherqualitycareatalowercost.For
themajorityoflowriskbirths,lowerresourceintensivebirthscorrelatewithpositiveoutcomes.Thereis
nosingledefinitionoflowriskbirth.However,HealthyPeople2020usedthisdefinitiontodefinelow
riskforcesareansections:Fullterm,singleton,andheadfirstpresentation.DatafromtheNational
CenterforHealthStatisticsshowthatasmanyas80%ofbirthsmeetthisdefinition.Ifthepercentageof
safelyachievablevaginalbirthsfortheselowerriskpregnanciesweretoincrease,resultinginadecrease
incesareans,overallbirthcostswoulddecrease.Outcomesshouldimproveaswellbecausevaginal
birthshavefewercomplications.Further,withadecreaseintherateofearlyelectiveandpreterm
births,fewerbabieswouldneedhighcostNICUcare,andbabieswouldhavehighersurvivalratesanda
healthierstarttolife.Atthesametime,thoseatelevatedriskfromsuchconditionsasgestational
diabetes,obesity,ortwinpregnancycanbenefitfrompersonalizedcarefosteringhealthyoutcomes.
Althoughtherelationshipbetweenqualityofcareandbetterhealthoutcomesisrecognizedbythefield,
thisrelationshipisnotalwaysreflectedinthecurrentU.S.paymentsystem,whichischaracterizedbya
tendencytoincentivizehighercostandlowerqualitycare.Inthematernitycarecontext,vaginalbirths
costless,havefewercomplications,andinvolveshorterstays,thusprovidinglessreimbursementto
hospitals;buttheyalsorequirepatienceandoftenseveralhoursofhardworkbythewomen,aswellas
supportfromthecareteam.Incontrast,cesareansaresometimesconsideredmoreconvenientby
women,practitioners,andfacilitiesbecauseoftheshorterdurationoflaborandtheabilitytoschedule
inadvance(TruvenHealthAnalytics,2013).Inpart,therateofcesareanshasincreased60%fromthe
mostrecentlowof20.7%in1996becauseofthis(AgencyforHealthcareResearchandQuality,2011).
Thisisdespitethefactthattheyareconsideredriskierforboththemotherandbaby.ACOGandthe
SocietyforMaternalFetalMedicinehavebothstatedthatthisincreasehasnotbeenaccompaniedby
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discernablegainsinmaternalornewbornhealth(AmericanCollegeofObstetriciansandGynecologists,
2014).

RoleofEpisodePaymentinMaternityCare
Thegoalofusingclinicalepisodepaymentsistoimprovethevalueofmaternitycarebyimprovingthe
outcomesandexperienceofcareforthewomanandherbabywhilereducingcosts.Althoughthe
paymentincentivesinepisodepaymentprovidesignificantsupportforthisgoal,thedesignand
implementationoftheepisodescarepathway(s)anddeliverymodel(s)arealsocriticalforexample,
ratesofcesareanbirthsorearlyelectiveinductionscouldbeimpactedbychangingprotocolswithina
hospital.TheCEPWorkGroupbelievesthatthegoalofepisodepaymentshouldgobeyondlowering
costs,andthatitshouldbedesignedsuchthatitsupportsamorepatientcenteredapproachtocare.
Specificgoalsofmaternityepisodepaymentinclude:

Increasingthepercentageofvaginalbirthsanddecreasingunnecessarycesareanbirths;

Increasingthepercentageofbirthsthatarefulltermanddecreasingpretermandearlyelective
births;

Decreasingcomplicationsandmortality,includingreadmissionsandneonatalintensivecareunit
(NICU)use;

Providingsupportforchildbearingwomenandtheirfamiliesinmakingcriticaldecisionsregarding
theprenatal,laborandbirth,andpostpartumphasesofmaternitycareandrespectingthose
choices;

Increasingthelevelofcoordinationacrossprovidersandsettingsofmaternitycare;and

Consistentlyprovidingawomanandfamilycenteredexperience.

Careimprovementsmustoccuracrossthecontinuumofprenatal,laborandbirth,andpostpartumcare
inordertosupportamorepatientcenteredapproachtocare.Episodepaymentcanaddresstheneed
forappropriate,highquality,prenatalandpostpartumcare.Testingforpotentialproblems(suchas
gestationaldiabetesorbirthdefects);monitoringthegrowthandhealthofthegrowingfetusandthe
woman;providingeducationtothewomanonwhattoexpectduringandafterbirth;andsupportingher
inmakingdecisionsaboutherpreferencesforinterventions,settings,andprovidertypescanallleadto
amoreengagedandhealthiermother.Postpartumcarethatsupportsthenewmotherinbreastfeeding,
babycare,contraceptivecare,mentalhealth,andselfrecoverycanhavealifelongimpactonthehealth
ofboththewomanandherbaby.Yettheseandotherhighvalueservicesarenotalwayseffectively
providedbecausethebulkofpaymentisfocusedonhospitalbasedlabor/deliveryservices.Therefore,
thegoalofepisodepaymentdesigninthisrealmisbothtoincentivizethedeliveryofthefullcontinuum
ofservicesbyholdingprovidersaccountablefortheirqualityandcoordination,andtodecreasecosts
whileimprovingthevalueofmaternitycareoverall.
Fortunately,Medicaid(whichpaysforapproximately45%ofbirthsannually),commercialpayers,and
largepurchasershavebeguntodevelopepisodepaymentinitiativesformaternitycareinrecognitionof
thewaysinwhichepisodepaymentcandrivehigherquality,lowercostcare(KaiserFamilyFoundation,
n.d.).

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Therearethreegeneraltypesofmodelsinthemarkettodaythatbundleallorsomeoftheservicesfor
maternitycareintoanepisodepayment.SeeAppendixDforatablesummarizingvariousinitiatives.
Examplesofeachmodelarebelow.
ComprehensiveBundle:Severalinitiatives,ledbybothMedicaidandcommercialpayers,definethe
episodeastheprenatal,laborandbirth,andpostpartumtimeframeandincludecareforthewoman
andsometimesthenewborn.Thisstrategyacknowledgestheimportanceofsupportthroughoutthe
entirematernitycareexperiencetoensurethebestoutcomesforthewomanandherbaby.Itis
agnosticastoboththebirthsiteandwhomanagesthebirth,andastowhetherthebirthisvaginalora
cesarean,butitistypicallypricedassumingahospitalbirth.
ComprehensiveBirthCenter/MidwifeBundle:Thisproviderdrivenepisodemodelincludesthefull
continuumofservices,muchlikethecomprehensivebundles,butispricedbasedonmidwife
management,andthusreflectsthecostofabirthcenterbirth.Inthismodel,ifawomanisreferredtoa
hospital,thenthehospitalispaidaseparatefee;thebundleisonlyforthemidwifeservicesandthefee
forabirthcenter.Insomecases,themidwifestillmanagesthebirthevenifitisinthehospital,butthe
facilityfeeforthehospitalispaidseparately.
BlendedRateforHospitalLaborandBirth(RegardlessofDeliveryType):Severalpurchasersand
providersareimplementingepisodesframedspecificallyaroundhospitalbasedlaborandbirth,and
whichdonotincludecostsforprenatalorpostpartumcareorcareforthebaby.Thismodelblends
cesareanandvaginalbirthreimbursementratesintoablendedcaserateforhospitals.Theprimarygoal
istodecreasecesareanrates.Hospitalpaymentsandtheclinicalprofessionalfeesarethesameinthis
model,regardlessofthedeliverymethod.Theepisodepricealsoincludesthecostsofpostpartum
complications,butnootherpostpartumcostsareincluded.
AsdescribedinmoredetailinAppendixD,maternityepisodepaymenthasbeenassociatedwith
increaseduseofpreventiveservices,lowercesareanrates,lowerreadmissionandcomplicationrates,
andlowerearlyelectivebirthrates.

Recommendations:MaternityCare
DesignElements
ThedesignelementrecommendationsreflecttheCEPWorkGroupsresearchandanalysisonarangeof
existingepisodepaymentinitiativesforjointreplacement(see AppendixC).SeeChapter2,Episode
PaymentDesignElements,forasummaryoftherecommendationsdescribedin moredetailbelow.

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1.

EpisodeDefinition

Theepisodeisdefinedtoincludethelargemajorityofbirths,
includingthenewborncare,thatarelowerrisk.Whilenotnecessarilylowerrisk,

episodepaymentmayalsobeconsideredappropriateforwomenwhomaybeat
elevatedriskduetoconditionsthathavedefinedandpredictablecaretrajectories,

suchasgestationaldiabetes.AstheCEPmodelmatures,somegroupswith

significanthighriskpregnancyexperienceandcapacitymayseekto

managetheentirecontinuumofrisk.

TheCEPWorkGrouprecommendsdefiningtheepisodetoincludeallservicesandcaredeliveredduring
threephasesofmaternity:prenatal,laborandbirth,andpostpartum(Figure7).Includingthesethree
phaseswithintheepisode,asopposedtonarrowlydefiningtheepisodearoundlaborandbirth,which
arearguablythecostliestaspectsofmaternitycare,iskeytoachievingthegoalsofepisodepayment.A
focusonlowerriskbirthswillhavesignificantimpactasthelargemajorityofbirthsareconsideredlow
risk.However,womenwithconditionsthatdevelopoverthecourseofthepregnancyorwhichhave
definedtrajectoriescanalsobenefit.Overtime,someproviderswhoareexperiencedwithhigherrisk
pregnanciesmayalsoseektomanagethecontinuumofriskunderneathaCEP.
Figure7:MaternityEpisodeDefinitionandTimeline

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2.

EpisodeTiming

Theepisodeshouldbegin40weeksbeforethebirthandend60days
postpartumforthewoman,and30dayspostbirthforthebaby

Includingtheentirepregnancy,thelaborandbirth,andthepostpartum/newbornperiodwithinone
paymentrecognizestheimportanceofprenatalandpostpartum/newbornsupportforthehealthofthe
womanandherbaby.However,someepisodepaymentinitiativeslimitthetimeperiodfortheepisode
tohospitalcareonly,anduseablendedhospitalcaserate(blendingpaymentforvaginalbirthswith
cesareans)forlaborandbirth.Whilethisapproachhasbeenshowntodecreasetherateofcesareans,
thepotentialforimprovingonabroadersetofoutcomesencouragesamorewoman/patientcentered,
coordinatedapproachacrosssettings,andcouldbeincreasedbyincludingprenatalandpostpartum
careintheepisode.
The60dayspostpartumrecommendationwillallowforpostnatalfollowuptooccurandwillensure
thewomanreceivesneededphysicalandmentalhealthcareinasufficienttimeperiodtobeableto
takecareofherbaby.Alesseramountoftimeisrecommendedforthebabytoensurethat
accountabilitywaslimitedtonewborncare.
Consistentprenatalcare,inadditiontoprovidingcontinuouscareforthewoman,canidentifyhighrisk
markers,suchasgestationaldiabetes.Prenatalcarecanalsoincludechildbirtheducationtosupporta
womanthroughthementalandphysicalchallengesofvaginaldeliveryandprovideothersupports
duringpregnancy,givingbirth,andthetransitiontonewparenthood.Highqualitypostpartumsupport
canlowerreadmissionrates,increaseratesofbreastfeeding,reducepostpartumdepression,and
provideastrongfoundationforthewomanasacaregivertoherbabyandherfamily.
Theremaybeconcernsamongstakeholdersthatincludingprenatalandpostpartumcareintheepisode
canleadtodecreasedaccesstoorlimiteddeliveryofthoseservicesbyaprovidertryingtoutilizefewer
resourcestomaximizepotentialsavings.Anotherconcernregardingpostpartumcareiswhetherthe
clinicianwhomanagesthebirthshouldalsobeaccountableforthepostpartumperiod,particularly
whenthepostpartumperiodmayincludesomepediatriccare.TheWorkGroupbelievestheseconcerns,
althoughvalid,aremanageable.Forexample,someinitiativesrequirethecollectionandmonitoringof
certainperformancemetrics,suchasnumberofvisitsanddeliveryofcertainprenataltestsand
screeningbeforethebirthandtheprovisionofbreastfeedingsupportorcontraceptiveadvice
afterwardstoensuretheirdelivery.Concernshavealsobeenraisedaboutwhethertoincludewomen
whodonotopttoaccessprenatalcareorwhoaccessprenatalcarelaterintheirpregnancy.Toaddress
theseconcerns,onebundlinginitiativeadjuststheepisodedefinitionandpricebasedondiffering
numbersofprenatalvisits.Anotheroptionistoexcludewomenwhodonothaveaminimumnumberof
visitsfromtheepisodedesign.
Recognizingtheseconcerns,itisneverthelessoptimalformaternitycareepisodepaymenttoinclude
prenatalandpostpartumcareinadditiontolaborandbirth,inordertofullyleveragetheopportunityto
improvevalueandoutcomesacrossallthreephasesofmaternitycare.

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3.

PatientPopulation

Theepisodeshouldprimarilyincludethelargemajorityofbirths,
includingnewborncare,thatarelowerrisk.Whilenotnecessarilylowerrisk,

episodepaymentmayalsobeconsideredappropriateforwomenwhomaybeat
elevatedriskduetoconditionsthathavedefinedandpredictablecaretrajectories,

suchasgestationaldiabetes.AstheCEPmodelmatures,somegroupswith

significanthighriskpregnancyexperienceandcapacitymayseekto

managetheentirecontinuumofrisk.

Therearetwoissuesofparticularimportanceindefiningthepopulationintheepisode:whetherto
includenewborncareandwhethertoincludeallpregnantwomen,orasubsetoflessriskywomen.
IncludingtheBaby:Somecurrentmaternityepisodepaymentinitiativesincludethebaby,whileothers
includeonlycareforthewoman.TheWorkGrouprecommendsincludingthebabyintheepisode
population,giventhattheprimaryfocusoftheepisodeisthebirthandtheprimarygoalisbotha
healthywomanandahealthybaby.Stakeholderreadinesstoimplementmaternitycareepisode
paymentcanbeafactorindeterminingwhethertoincludethebabyinthepopulation.Inthebeginning
oftheseinitiatives,evenlimitingtheepisodetothechildbearingwomancanyieldimprovementsin
valueandmaybelesscomplexfortheprovidertoimplement.However,theWorkGrouprecommends
transitioningtoadesignthatincludesboththewomanandbabyassoonaspossible.
Theinclusionofthebabyintheepisodepopulationraisesissuesrelatedtoassigninganaccountable
entity(e.g.,whenmanagingthepregnancyrequiresaneonatologyspecialistinadditiontoorinsteadof
theOB/GYNorthemidwife).Althoughthesecasesarerelativelyrare,suchinstanceshighlighttheneed
forcooperationamongallprovidersacrosstheepisode,aswellastheneedforclearpoliciesonthelevel
ofriskwhentheprovideridentifiedastheaccountableentityhaslimitedabilitytomanagecareacross
providers.
DefiningthePregnancyLevelofRisk:TheWorkGrouprecommendsthat,atleastinthebeginningof
theimplementationofCEPmodels,the episode should primarily include the large majority of births,
including newborn care, that are lower-risk. The Work Group also supports CEP for women who may be at
elevated risk because of predictable risk factors that have defined care trajectories, such as gestational
diabetes. For both lower and elevated risk pregnancies, CEP may offer opportunities for better, safer care
at lower cost. As the CEP model matures, some groups with significant high-risk pregnancy experience
and capacity may seek to manage the entire continuum of risk.

ThereisampleopportunityinthisgroupofwomenforCEPtoprovideincentivestodiscouragetheuse
ofunnecessaryservicesandincreasetheuseofservicesthatareshowntobeeffectivebutunderused.
Beginningwithlowerriskpregnanciesalsoensureslessvariationinthecomplexityandtheriskthat
providerswillabsorb.However,theWorkGroupalsobelievesthatwomenathigherlevelsofriskcould
benefit.
Somehighriskpregnanciesintroducealevelofvariabilityandpotentialriskfortheaccountableentity
thatcouldbedifficulttomanage,particularlyforsmallpractices.Intheeventthatapregnancyresultsin
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ababywhorequiresintensivecare,stoplosspoliciesshouldbeestablishedtomitigatepotential
unanticipatedrisksoftrueoutliers.Criticaltotheepisodepopulationdesignelementisdefiningthe
exclusions.Definitionsvary,dependingonwhenduringthematernityperiodthedeterminationismade
andbywhom.
Definingrisklevelscanbedifficultbecausetheycanchangeoverthecourseoftheepisodeandcanbe
influencedbythecaredelivered.Initialdeterminationofwhetherawomanislowriskcanbemadeat
thefirstprenatalvisit,butitmaychangeovertime.HealthyPeople2020usesadefinitionforcalculating
lowriskforcesareanratesthatisbasedonfactorspresentimmediatelypriortobirthfullterm,single,
headfirstpresentation(OfficeofDiseasePreventionandHealthPromotion,2016;Stapleton,Osborne,
&Illuzzi,2013).Ahigherriskpregnancyisonewhichputsthemother,thedevelopingfetus,orbothat
anincreasedriskforcomplicationsduringorafterpregnancyandbirth.Clinicalparametersfor
identifyingahighriskpregnancycaninclude:

Preexistinghealthconditions,suchasdiabetes,hypertension,epilepsy,cancer,renaldisease,
obesity,advancedmaternalage,andmentalhealthconditions;

Lifestylechoices:Cigarettesmoking,alcoholuseandillegaldruguse;

Previouspregnancycomplications,suchasgeneticorcongenitaldisorder,stillborn,preterm
delivery;and

Pregnancycomplications,whichcanalsoariseduringthepregnancyandbirth,suchas:Multiple
gestation,fetalgrowthrestriction,prolongedprematureruptureofmembranes,orplacenta
abnormalities.

Asevidencedbythelistabove,someoftheexcludedcasesmaynotbeclearuntilafterthebirth.CEP
maybehelpfulineffectivelymanagingcomplicationsastheyarise.TheWorkGroupadvisesthose
designinginitiativestoconsiderthedifferentlevelsofriskanddevelopexclusionarycriteriaexclusionsof
importancetotheirpopulations.Ifthereisconcernovertheabilityforproviderstoaccepttheriskofa
higherriskpopulation,therearewaystolimitriskthroughriskadjustment,includingfactorsthatmight
ariseduringpregnancy.Stop/losslimitswillbediscussedinthediscussionontheLevelandTypeofRisk
below.SeeAppendixKforlinkstoresourcesthatprovidelistsofexclusions.

4.

Services

Coveredservicesincludeallservicesprovidedduringpregnancy,
laborandbirth,andthepostpartumperiod(forwomen)andnewborn

careforthebaby.Exclusionsshouldbelimited.Initiativesshould

alsoconsiderincludinghighvaluesupportservices,suchasdoulacare
andprenatalandparentingeducation.

Allservicescurrentlycoveredduringprenatalcarevisits,laborandbirth,postpartumcare,andnewborn
careshouldbeincludedaspartoftheepisodeservices.Thisincludesservicessuchasgenetictesting,
imaging,andanesthesiathataretypicallyprovidedtopregnantwomen.Wenotethetimeframefor
newborncareisshorterthanforwomanscare;thisisintentionaltolimittheservicesincludedinthe
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pricetothoseneededtoaddressneonatalcareneeds.TheWorkGroupconsideredexcludingspecific
newbornservices,butdeterminedthatlimitingthetimeframeto30dayspostdischargewouldensure
thatthebulkofongoinghealthybabypediatriccare,suchasimmunizations,wouldbedeliveredoutside
thattimeframe.
Centraltotherecommendationofincludedservicesistheissueofcurrentlyunderusedservices.Some
underusedservicesaretypicallycoveredintodaysdeliverysystems,butothersarenot.Eachsetof
servicescreatesopportunitiesforeffectiveimplementationofamaternitycareepisodepayment
strategy.
CurrentlyCoveredbutUnderusedServicesNotDirectlyRelatedtoPregnancyandBirth:Some
initiativesseetheOB/GYN,midwife,orfamilyphysician,astheprimarycareproviderduringthe
pregnancy,birth,andpostpartumperiods,andviewtheprenatalcareperiodasanopportunityto
performpreventivescreenings,suchasforscreeningsforchlamydiaorcervicalcancer.Thesescreenings
arenottypicallyrelatedtopregnancy,butitmaybeimportanttoincludethemintheepisodeprice,as
theyarecommonlyprovidedtowomenaspartoftheirprenatalcareand,ifpresent,couldimpactcare
duringthepregnancy(AmericanAcademyofPediatrics,2013).Anotheroptionmightbetopay
separatelyforthemthroughFFS,butincludetheminepisodequalitymetrics,perhapswithapayfor
performanceincentiveinadditiontothebundledpaymentincentives.
CommonlyUncovered(andUnderused)HighValueServicesDirectlyRelatedtoPregnancyandBirth:A
varietyofservicesthathavebeenshowntoimproveawomansbirthexperienceandpotentially
improveoutcomesarenotcommonlypartoftypicalbenefitpackages.Oneimportantservicethat
clinicalepisodepaymentisdesignedtoencourageisgreatercarecoordinationacrossprovidersbythe
providersthemselves.Typically,providersareexpectedtoprovidesomelevelofthiscoordination
withoutadditionalreimbursement.Otherservicesnottypicallycoveredarethoseprovidedbydoulas,
carecoordinators(e.g.,forshareddecisionmaking,sharedcareplanning,communityreferrals,and
followuponsuchmattersassmokingcessation,mentalhealthreferrals,andcompletionofpostpartum
visits),groupprenatalvisits,andbreastfeedingsupport.Theuseofdoulasaloneorcontinuoussupport
forwomenduringchildbirthhasbeenassociatedwitha28%reductionincesareanbirth(Hodnettet
al.,2013).
Althoughbundlingcurrentlycoveredservicescouldresultinefficienciesandimprovedoutcomes,
providingincentivestoincreasetheuseoftheenhancedservicesdescribedabovemayleadtoeven
highervaluecare.Prospectivepayment(asdescribedinthePaymentFlowRecommendationbelow)
mayallowforgreaterproviderflexibilitytodelivertheseservices,asitdoesnotrelyonadirectpayment
fromthepayerforindividualcoveredservices.Evaluationoftheenhancedprenatalcaremodels
throughmaternitycarehomes,groupprenatalcare,andbirthcentersbeingtestedwithintheCMS
CenterforMedicareandMedicaidInnovationsStrongStartinitiativeprovideslessonsforthetypesof
servicesthatsupportmaternitycareepisodepaymentmodels(seePatientEngagement
recommendation).Regardless,itisimportanttomonitortheshiftinservicepatternstoensurethatthe
initiativeresultsinthehighestvaluecarefeasibleanddoesnotleadtounintendedconsequences,such
asrestrictingtheuseofimportantservicesbecauseoftheriskinvolvedintheepisodepayment.

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5.

PatientEngagement

Engagingwomenandtheirfamiliesiscriticalinallthreephases
oftheepisodeprenatal,laborandbirth,andpostpartum/newborn
tocontributetothefoundationforhealthywomenandbabies.

Engagingthepatientacrossthefullepisodeofmaternitycareprovidesimportantopportunitiesto
contributetomaternitycareepisodepaymentsuccess.Itisnotuncommonforpregnantwomentowant
tounderstandthechangestheyareexperiencingandtolearnaboutcareoptions.Manyprioritizebeing
involvedinmakingdecisionsabouttheircare.Theyaremotivatedtocontributetohealthyoutcomesfor
themselvesandtheirbabies.Moreover,giventhatmostareembarkingonalongperiodofhaving
disproportionateresponsibilityformanaginghealthcareacrossgenerations,theentirematernitycare
episodeisanoptimaltimetohelpwomenbecomeeffectiveusersofhealthcare.
Itshouldbestressedasearlyaspossibleinthematernityexperiencethatthewoman'schoiceofacare
providerandbirthsettingareinterrelated.Giventheextentofpracticevariation,understandingthese
choicescouldgreatlyimpacttheircareoptions,experiences,andoutcomes.Withthegrowthof
meaningfulpublicreportingofperformanceresults,andevidenceofwomensconsiderableinterestin
findingandusingsuchinformation,manywomenwouldbenefitfrombeingdirectedtorelevant
resourcesandhavingaccesstoguidancefromsomeonewhocouldhelpthemidentifyandinterpret
availableandrelevantcomparativequalityinformation(Declercqetal.,2013).Healthplansarewell
positionedtosupportwomeninthiswayand,asapregnancyproceeds,toencouragethemtoassess
whethertheirchosencarearrangementsprovetobeagoodmatchwiththeirvaluesandpreferences.
However,itisalsoimportantthatprovidersunderstandthechoicesawomanfacesinherareaandare
willingtohelphermakethem,becausenotallhealthplanswillbesetuptosupportthesediscussions,
andthewomanmaygofirsttotheprovider.Itmayalsobehelpfulforaprimarycareprovidertoassista
womaninthesedecisions.Thislevelofinvolvementcanhelpawomanobtainthetypeofhighquality
caresheprefersandfosterqualitybasedcompetitioninthemarketplace.
Afteramaternitycareproviderisselected,sharedcareplanningshouldbeintegratedthroughoutthe
episode,includinggoalsetting,shareddecisionmaking,anddocumentingpreferencesanddecisions,
withtheunderstandingthatcircumstancescanchangeovertime.Optimally,informationtechnology
makesthecareplanavailableacrosstheepisodeatallsitesofcareandtoallmembersofthecareteam,
includingwomenandfamilies.
Somepatientengagementeffortsinvolveenhancedservices,suchasthematernityhomeandgroup
prenatalvisitsbeingstudiedintheCMSsponsoredStrongStartdemonstration(CenteringHealthcare
Institute,n.d.;Hilletal.,2016).Inthematernitycarehomemodel,clinicalorcommunityhealthworker
carecoordinatorsareassignedtoworkwithpregnantwomentosupporttheirgoals,providereferralsto
communityresources(suchassmokingcessationprograms,childbirtheducation,mentalhealth
services,breastfeedingsupport),fostersuccessfulcaretransitions,andensurethatwomenattend
postpartumvisits.TheYear2StrongStartevaluationsuggeststhattheseenhancedservicesare
associatedwithadecreaseininterventionsthatarenotmedicallyindicatedandthatwomenare
pleasedwiththistypeofcare.StrongStartparticipantsexperiencingenhancedprenatalcareinbirth
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centershadareductionincesareansandotherinterventions,hadstrongbreastfeedingresults,and
wereespeciallyhappywiththeirexperiences(Hilletal.,2016).Inthecontextofthisclinicalepisode
paymentmodel,acarecoordinatorisalsowellpositionedtoensurethatchildbearingwomencomplete
selfreportedsurveysofexperienceandoutcome.Inaddition,womenwhohaveaccesstodoula
services,includingprenatalandpostpartumsupport,experiencelowerfrequencyofcesareansections
andincreasedbreastfeeding(NationalPartnershipforWomen&Families,2016).
Highqualitychildbirtheducationclassesareanotherimportantwaytoengagewomeninlearningabout
optionsandmakinginformeddecisionsabouttheircare.Benefitpoliciesvary,butmanyMedicaid
programsincludechildbirtheducationasacoveredbenefit.HealthyPeople2020includesagoalto
increasethenumberofwomenwhoattendchildbirthclasses(OfficeofDiseasePreventionandHealth
Promotion,2016).Theseclassescandecreaseawomansfearsaboutlaborandbirthandareshownto
beacriticalfactorinreducingearlyelectivebirths.
Otherexamplesoftoolsforpatientengagementincludeshareddecisionmakingaids,suchasthe
decisionaidsdevelopedbytheInformedMedicalDecisionsFoundationand Childbirth Connection(now
availablethroughHealthwise)andtheuseofmobiledevices,includingText4baby,toaccesshealth
informationandservicesthatprovideindividualizedinformationbasedonthepregnancystageand
individualneeds.Anonlineinventoryidentifiesdecisionaidsbytopicratedaccordingtointernational
standards(OttawaHospitalResearchInstitute,2016).
Further,basedonthesuccessoftheOpenNotesproject,agrowingproportionofpatientsaregaining
fullaccesstotheirelectronichealthrecords(Belletal.,2015;Eschetal.,2016;Walker,Meltsner,&
Delbanco,2015).AnotherinitiativeMaternityNeighborhoodhelpscliniciansandwomen
communicateandqueryeachother,trackwomensprogress,scheduleappointments,andshare
educationalresources(MaternityNeighborhood,n.d.).Meanwhile,theinitiativeenableswomento
review,discuss,andcontributetotheirhealthrecord.Existingexperiencesuggeststhatfulland
interactiveaccesstohealthrecordsmaycontributetothesuccessofepisodepaymentmodels.Patient
portalscandeliverabroadrangeofuserfriendly,evidencebasedtoolsandeducationalresources.
Whilenotyetstandardpractice,awidevarietyofpatientengagementsupportisnowavailable(see
AppendixGforalistofresources,includingpatientengagementtools).
Thematernitycareepisodeshouldsupportthestandardizeduseofpatientengagementstrategiesand
models,particularlygiventhatthesestrategiesaretypicallyunderutilized.Infact,itmaybefeasibleto
encouragesomereinvestmentofaportionofoverallepisodesavingsintoservicesthatsupportsuch
engagement.Oneproviderdriveninitiativespecificallyincludedadditionalservicessuchasdoulasand
patientnavigatorsandfoundthemtobeofsignificantvalueinengagingpatientsandimproving
outcomes.8
Further,toconsistentlyimproveuponpatientengagementactivities,itwillbeimportanttousepatient
activationmetricstotrackoverallpatientengagement.AchangescoreforthePatientActivation
Measure(ahealthypersonversionrecentlyendorsedbytheNationalQualityForum[NQF])
administerednearthebeginningandendofpregnancywouldincentivizethoseparticipatinginthe
episodepaymenttobuildwomensskills,knowledge,andconfidenceastheyapproachgivingbirthand
newparenthood.

8ProvidenceHealthandServicesinitiative,articleandemailconversation.April2016.SeeAppendixDformoredetail.

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Afinalapproachtoengagingwomenistocommunicate,inplainlanguage,thattheyarereceivingtheir
maternitycarewithinanepisodepaymentmodelandtoexplaintheimplicationsintermsoftheir
participationandhowthemodelaffectscostsharing,healthcarequality,andhealthcareoutcome.

6.

AccountableEntity

Theaccountableentityshouldbechosenbasedonreadinessto
reengineerchangeinthewaycareisdeliveredtothepatientandtoacceptrisk.
Inthismodel,theaccountableentitywilllikelyrequireadegreeofshared
accountability,giventhenumberofcliniciansworkingtocareforapatient.

OverallReadiness:Thequestionofreadinesstobothreengineerthecaredeliverymodelforthe
patient,andintheprocess,acceptthefinancialrisktheymightincur,iscentraltothedeterminationof
whatentityorentitiesshouldbeaccountable.Payersshouldworkwiththeaccountableentitytoassess
theirreadiness,andpromotecollaborationtoallowformultipleproviderswithinamaternitycareteam
tosharetheriskandrewardinsuchamannerthatallareengagedincreatingaseamless,efficient,
patientcenteredcareprocess.Thisprocesscanrequireactiveparticipationacrossthecontinuumby
aligningincentivesacrosscontractsintheprivatesector,becausethepayeroftenhascontractsdirectly
withproviders.
Whilelocalsituationswillvary,theCEPWorkGroupfavorscliniciansasthepreferredaccountable
entity.Theaccountablecliniciansaremorelikelytobeinvolvedthroughouttheentirepregnancy.In
addition,ifFFSrepresentsthepaymentmethodologywithretrospectivereconciliation,hospitalsmay
havelessofanincentivetodecreasepracticesthatprovidehigherreimbursementbecausethebulkof
thecostsforthisepisodelieinthelaborandbirthfacilityfees.
Optimally,accountabilitywouldbesharedamongallinvolvedproviders,ifincentivesarealigned.
However,itcanbedifficultfromalegalandfinancialperspectivetocreatethenecessarystructuresto
shareaccountability.Incircumstanceswheretheproviderisahealthsystemencompassingboththe
facilityandtheclinicians,accountabilitycouldmoreeasilybesharedbetweenthecliniciansandthe
facility.Somehospitalsownbirthcenters,andthismaybeanidealsituation.Oneinitiativebrought
togetherthefacilityandtheprovidersthroughabirthcenterastheaccountableentity.Inthisexample,
ifthewomanneedstogotothehospitalfortheactualbirth,thehospitalfacilityfeeispaidoutsidethe
bundle.Othersuseablended(vaginalandcesarean)caseratewithadiscountbuiltintoencourage
lowercesareanrates,and,inthesecases,holdthehospitalandcliniciansaccountableseparatelyforthe
partoftheepisodepricethatisallocatedforeach.InMedicaid,theprocessofsharingaccountability
maybeaffectedinstatesthathaveregulatorybarriersagainstoneproviderassigningpaymentto
another.Thisisdiscussedbelowaswell,inRecommendation7,PaymentFlow.
Anotherchallengerelatedtoassigningtheaccountableentityrelatestosituationsinwhichthenewborn
needsintensivecare.Insuchaninstance,thenewbornspecialistwilltakeoverasthecaremanager.
Whileweanticipatethatlimitingthepopulationtolowerriskpregnancies,stop/losslimitsandrisk
adjustmentmaylimittheriskoftheassignedaccountableentity.Itwillbeimportantfortheteamthat
managedthebirthtoincorporatethenewbornspecialistintotheprocess.
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Insomecases,thepracticeresponsibleforthewomanscarebeforethebirthmaynotbeavailableto
managetheactuallaborandbirthorthehospitalmayusealaboristtomanagethebirth.Regardless,
thedeterminationoftheaccountableentityandalignmentandcoordinationacrosstheentireepisode
ofcaremusttakeintoconsiderationthespecificcontextinwhichthecareisdelivered.
Onequestionthatarisesinconsideringalternativestohospitalbirthsishowwidespreadtheavailability
isofbirthcentersorhomebirths.AccordingtotheAmericanAssociationofBirthCenters,thereare325
birthcentersinthenationin38states.Thereare11,114certifiednursemidwives,whopractice
primarilyinhospitals,butalsoinbirthcentersandhomebirths,with1,904certifiedprofessional
midwives,whomanagebothbirthcenterandhomebirths.Incontrast,therewere33,624OB/GYNsin
2010.Whilenotpresentinallregions,manywomenhaveaccesstotheselowercostbirthoptions,
whichalsoresultingoodbirthoutcomes(Cheyneyetal.,2014;HealthManagementAssociates,2007).

7.

PaymentFlow

Theuniquecircumstancesoftheepisodeinitiativewilldetermine
thepaymentflow.Thetwoprimaryoptionsare:
1) aprospectivelyestablishedpricethatispaidasonepaymenttothe
accountableentity;or2)upfrontFFSpaymenttoindividualproviders
withintheepisodewithretrospectivereconciliation

andapotentialforsharedsavings/losses.

Episodepaymentsaretypicallydispersedviaeitherprospectivepaymentorretrospectivereconciliation
(Figure8).
InProspectivePayment,paymentisprovidedforthewholeepisode,includingallservicesand
providers,andpaidtotheaccountableentity,whosubsequentlypayseachproviderinturn.This
paymenttypicallyoccursaftertheepisodehasoccurredbutistermedprospective,asthepriceofthe
episodeissetinaprospectivebudgetaheadoftime,andthesavingsorlossesarenotsharedwiththe
payer;theyaresimplyafunctionofhowwelltheaccountableentity(andtheproviderswithwhomit
coordinates)managesthepredeterminedprice.InRetrospectiveReconciliation,individualproviders
areeachpaidonatypicalFFSbasisandthenthereisareconciliationbetweenthetargetepisodeprice
andtheactualaverageepisodepriceafteraperiodoftimeacrossalltheepisodesattributedtoa
provider.Basedonaspecificformula,whichiseithernegotiatedorestablishedbythepayer,the
accountableentitycanshareingainsand/orlosseswiththepayer.Insomeinstances,gainsorlossesare
alsosharedamongprovidersintheepisode,inordertoencouragecollaborationandcoordination
acrosssettings.Thesetypesofgainsharingarrangementsneedtobeconsideredwithintheparameters
offederallawsthatmayimpacttheirdesign,which isdiscussedinfurtherdetailintheregulatory
infrastructuresectionoftheOperationalConsiderationssectionofthisWhitePaper.

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Figure8:RetrospectiveReconciliationvs.ProspectivePayment

Prospectivepaymentisanoptioninsomecircumstancesparticularlywhentheaccountableentityisa
healthsystemthatalreadyintegratestheclinicianandfacilitypayment.Asapracticalmatter,itmaybe
moredifficulttoimplementasingleprospectivepaymentwhenmultipleprovidersinvolvedindelivering
thecaredonotalreadyhavemechanismsforadministeringpaymentamongthemselves,suchasisthe
caseinintegratedsystems.Increaseduseofprospectivepaymentcanacceleratedevelopmentof
varioussupportingmechanismstoaidinthisprocess.OnecautiononprospectivepaymentinaFFS
Medicaidprogramisthattheremayberegulatorybarriersforoneproviderassigningpaymentto
another.Legalcounselshouldbesoughtinthisscenario.However,retrospectivereconciliationiseasier
toadministerwithinourcurrentFFSenvironmentbecauseitrequiresfewerchangesfromcurrent
practicewheretheprevailingmodelisanopen,nonintegratedsystem.Inaddition,retrospective
reconciliationismoreprevalentincurrentepisodeinitiatives.Itdoesnotrequireproviderstodevelop
thecapacitytopayclaims,andallowsforbettertrackingoftheresourcesusedintheepisode.Italsocan
bebuiltonanexistingpaymentsystem.
Nevertheless,prospectivepaymenthasadvantagesinthatitisaclearbreakfromthelegacyofFFS
paymentandmayencouragegreatercoordinationandinnovationinepisodepayment.Forexample,ina
prospectivepaymentinitiative,itmaybeeasiertobeflexibleindeliveringotherwiseuncoveredservices,
suchaschildbirtheducationorcarecoordination,whichassistprovidersinachievingthegoalsoffewer
pretermdeliveriesandahigherlevelofvaginalbirths.Overall,itwillbeimportantforpayersinspecific
regionstocoordinatetheirstrategiesonpaymentflow,asitiseasiertoadministerforprovidersifthey

arepaidthesameway.

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8.

EpisodePrice

Theepisodepriceshouldstrikeabalancebetweenproviderspecific
andmultiprovider/regionalutilizationhistory.Thepriceshould:

1) acknowledgeachievableefficienciesalreadygainedbypreviousinitiatives;
2) reflectalevelthatpotentialproviderparticipantsseeasfeasibletoattain;and
3) includethecostofservicesthathelpachievethegoalsofepisodepayment.

Pricingepisodesinvolvessignificantcomplexity,bothtoassuretheaccuracyofestimates,andto
developapricingstructurethatisfairtoproviderswhileencouraginginnovation.Thegoalshouldbeto
establishapricethatencouragescompetitionamongproviderstoachievethebestoutcomesforthe
lowestcost.However,certainissuesneedtobetakenintoconsideration,includingaccountingfor
variationintheriskofthepopulation,theimpactofdifferingfeeschedulesandnegotiatingpower,
shiftsininsurersmidstream,regionalvariationinavailabilityoftypesofproviders,andensuringthat
paymentsaresufficienttoadequatelyreimburseforhighvalueservices.
Themonetaryrewardsorpenaltiesthatanaccountableentitymayexperiencearedeterminedinlarge
partbythemannerinwhichtheepisodepriceisdetermined.Inaddition,thereareseveralkeyaspects
thatinteractintheestablishmentoftheepisodeprice.Allpayerswillexpectsomereturnontheir
investmentsinthispaymentdesign,andcanchooseavarietyofmechanismstogeneratesomelevelof
savings.Itisalsoimportanttoconsiderincludinginthetargetepisodepricecostsforhistorically
underusedservices,asdiscussedinRecommendation4,andadditionalservices,suchasapatient
navigator/carecoordinator,groupvisits,adoula,orbreastfeedingsupport.Further,whethertobuildin
savingsforimprovements,suchaslowercesareanrates,isalsoaconsideration.
Typically,thetargetepisodepriceissetusingsomecombinationofregionalandproviderspecificclaims
dataforaperiodoftimethatincludesasufficientnumberofcasesusedinestimatesforthecoming
year.Insomecases,thepayercanalsoincludeanestimateofadecreaseincostsbasedonquality
improvements,suchaslowercesareanratesorlessneedforNICUcare.TheWorkGrouprecommends
balancingregional/multiprovider9andproviderspecificcostdata:
BalancingRegionalandProviderSpecificData:Costdatashouldreflectamixofproviderandregional
claimsexperience.Thegoalofincludingregional,ratherthanmarketleveldata,istoensurethatthereis
enoughvariationinepisodecost.Thismixwillalsoensurethattheestablishedepisodepricetakesinto
considerationtheuniqueexperienceofthespecificprovider,andthatthegoalsaresetbasedonwhatis
feasibleintheregion.Riskadjustmentwillbeneededduringthisprocesstoadjustfortheunique
characteristicsofthepopulationtheproviderserves.Ifthepayerisanationalpayer,itmaybemore
difficulttoaddressspecificproviderissuesandwillrequireconsiderationoftheuseofnationalclaims
experiencetoensureequityacrossregions.Overtime,asperformancebecomeslessvariable,itmaybe

Forpurposesofthispaper,regionisnotdefined.Theregionwillbedefinedasacombinationoftheexperienceof
multipleproviders.Weusethetermregionaltoreflectthisassumption.
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usefultolessentheproportionoftheepisodelookbackperiodthatisbasedontheorganizations
specificexperience.
RegionalCosts:Usingregionlevelclaimsdataallowsthepayertotakeintoaccountthecostsofmultiple
providerswithinaregion,reflectingthefactthatoneproviderscostsmaynotberepresentativeofthe
entireregion.Italsoaddressesthevariabilitythatmayexistforaproviderwithalowvolumeofcases.
However,theconcernwithusingregionalclaimsisthat,ifasawhole,providersinthatregionhave
alreadyachievedacertainlevelofefficiency,theymaybelessabletoachievefurthersavings.In
essence,theseregionsortheprovidersinthemwillarguethatanefficientregionwillbepunished
foritspreviousworktoachievetheseefficiencies.Ontheotherhand,iftheregion,onaverage,hasa
higherperbundlecostthanotherregions(orspecificproviderswithintheregion),thepayermaynot
achieveasgreatalevelofsavingsthaniftheepisodepricewastobesetatanationalorprovider
specificlevel.Whilebasingsomepartofthepriceonregion,itisalsoimportanttonotevariationacross
regionsandtoconsiderwhethervariationacrosstheregionsiswarrantedornot.Itisimportanttolook
atthisclosely,andnotjustbakeinregionalvariationifthereisnotobjectivereasonfordoingso.
ProviderCosts:Providerspecificcostsaretheactualcostsfortheproviderspreviouspatients.For
example,iftheOB/GYNpracticeistheaccountableentity,thepayerwouldconducttheanalysisusing
thecurrentepisodedefinitionandapplyittoitspregnantpatientsoverthepasttwoyears.The
challengeisthatalthoughthesecostsmaybeaccurateforagivenclinicalpracticewithagivenpayer,
theymaybuildinexistingefficienciesthatmakeitmoredifficulttoachievesavingsorleaveinplace
builtininefficienciesthatlimitthesavingsforthepayer.
Onechallengeinmaternitycareisthatdifferentprovidersmayhavedifferentepisodecosts.
Consequently,payersmaytakevariousapproachestoepisodepricingasafunctionofotherfactors,
includingnetworkconfiguration,benefitincentives,andpreferredmechanismsforcomingtoagreement
onpricing.Forexample,becausethereissignificantvariationincesareansectionratesacrossproviders,
aswellasvaryingprices,payerswillneedtodeterminewithwhichproviderstheywanttobasethe
episode.Determiningwhatlevelofcesareanratetobuildintothepricewillvarybasedonthepayers
networkandnegotiatingpower,oritmayimpactthedecisionsthepayermakesregardingwithwhich
hospitalstocontract.Itisalsothecasethatservicesdeliveredatonehospitalmaybemoreorless
expensivebasedonthefeestheyhavenegotiatedwithpayers.Anotherexampleofachallengespecific
tomaternityistheabsenceofuniformbillingcodesforbirthcentersacrosspayers.Thismayrequirea
benchmarkingprocessthatutilizesdifferent,orproxy,billingcodes.
Significantvariationincostsbetweenhospitalsandbirthcenterscanalsogreatlyimpactepisodecost.
Researchincreasinglyrevealsthatbirthsmanagedbymidwivesandbirthsinbirthcentersarenotonly
lessexpensivethanhospitalbirthsbutalsooftenleadtothesame,ifnotbetter,outcomes(Howell,et
al.,2014;Johantgenetal.,2012).Ifawomanchoosestogotoabirthcenter,thecoststructureis
significantlylowerthanifshechoosestogivebirthinahospital.Astrategymightbeonewherethe
payerbuildsanetworkeitherwithhospitalsthathavelowercesareanratesorwithincentivesfor
womentomorefullyutilizeandexpandaccesstobirthcentersintheirregion.Thebundledpricecould
bebasedonthatlowerintensitybirthmodel,butmayonlyapplyinthatsetting.
IncentivizeMoreEfficientLevelsofPractice:Inadditiontohistoricalproviderandregionleveldata,the
episodepriceshouldbebasedontheperformanceofthebetterperformersinaparticularmarket,such
thatallproviderscanseethattheepisodepriceandthequalitymetricperformancethresholdsare
feasibletoachieve.Ifaprovidersperformanceisalreadyatarelativelyefficientlevel,itwillneedtosee
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somerewardforthatachievementatthesametimethatlowperformerswillhaveanincentiveto
improve.
Theepisodepricecanberevisedovertimetoensurecontinualimprovementbyboththemoreandless
efficientproviders.Inthisway,theepisodepriceautomaticallyintegratessavingsandsimultaneously
incentivizesacompressionofvariationincostandqualityacrossallproviders.Finally,theepisodeprice
shouldtakeintoaccountservicesthatarehistoricallyunderreimbursed,andthus,underused,butareof
highvaluetothepatient.Carecoordination,patientengagement,shareddecisionmaking,and
assessmentofpatientreportedpainandfunctionareexamplesofservicesthatcouldfallunderthis
category.
OtherFactorsImpactingEpisodePrice
Therearemanyotherfactorsthatshouldbeusedindevelopingtheepisodeprice,thoughtheabilityto
dosowilldependontheavailabilityofdataandanalytictools.Theseinclude:
SocioEconomicStatusofthePatientPopulation:Thereareanumberofsocioeconomicfactorsthat
haveasignificantimpactonapatientshealthstatuspriortopregnancy,accesstocare,andpost
partumoutcomesforthewomanandthebaby.Theseincludeincome,literacystatus,livingstatus(living
alone,livinginacommunitywithoutfamilyorothersupportsnearby),andavailabilityoftransportation
(bothingeneral,andtocaresettings),amongothers.Certainsocioeconomicfactorsmayalignwitha
specificpayercategory,whetheritbeMedicaidorcommercialpayers.
Publicvs.PrivatePayers:Therearedifferencesbetweenpublicandprivatepayersthatshouldbe
acknowledgedandreflectedintheepisodepricing.Inadditiontothesocioeconomicstatusofthe
patientpopulation,asdescribedabove,thereisalsoadifferenceinhowoverallpricingisset.Forprivate
commercialpayers,pricingisanelementofnegotiation;inthepublicpayerrealm,pricesaresetbythe
publicpayer,ifpaidonaFFSbasis.ManagedcareplansinMedicaidandMedicarewillnegotiatewith
providers,astheydointhecommercialmarket.Eitherway,thiswillimpactthelevelatwhichthe
episodepriceisset,aswillthemarketinwhichthepayeroperates.Ifparticipationisvoluntary,some
formofnegotiationwillbenecessarywhetherthroughdirectdiscussion,orthroughthepublicprocess
ofrulemaking.Iftheinitiativerequiresparticipation,itmaybeeasiertodetermineanepisodeprice.
However,thepricewillneedtobeonewhichisrealisticforproviders.
TrustedEmpiricalData:Onechallengeistheabilityforpayersandproviderstounderstandthevariation
inthecostsoftheepisodeacrosstheirregion.Determiningtheappropriatepricerequiresempiricaldata
fromatrustedsource.Theavailabilityofthesedatatoidentifytheopportunitiesforefficiencyiscritical
tothesuccessoftheseinitiatives.
EpisodePaymentFlow:Theepisodepricecanbesetretrospectivelyinanepisodemodelforwhich
retrospectivereconciliationistheselectedpaymentflow.Similarly,thepricecanbesetprospectivelyin
amodeldesignedaroundprospectivepayment.Thus,settingtheepisodepriceandthepaymentflow
shouldbepartofanintegratedprocess.
PatientandFamilyDefinitionsofValue:Informationonthetypesofservicesthataremostvaluedby
patientsandtheirfamiliesshouldbeconsideredindeterminingtheepisodeprice.Thisinformation
wouldnottypicallybecapturedviahistoricaldata,butratherviaengagementbetweenprovidersand
theirpatients,aswellasbetweenpurchasersandtheiremployees.Forfurtherdiscussiononthistopic,
pleasereadthepaperonFinancialBenchmarking,clickhere.

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9.

TypeandLevelofRisk

Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.
Transitionperiodsandriskmitigationstrategiesshouldbeused
toencouragebroadproviderparticipationandsupportinclusion
ofasbroadapatientpopulationaspossible.

Thegoalwhensettinganepisodepriceshouldbeto
incorporatebothupsiderewardanddownsiderisk.
Withoutdownsiderisk(wheretheactualcostsexceed
thetargetepisodeprice),theaccountableentityand
otherinvolvedprovidershavelessincentivetomake
thenecessarycareredesignchangestocreate
efficienciesandimprovepatientcare.Further,
increasesinthecostofcaredeliveryfromyeartoyear
cannegatethebenefitsofupsidesharingofsavings
becauseoftherelianceonhistoricaldata.Prospective
paymentbydefinitionincludesboth.Retrospective
reconciliationwithupfrontFFSpaymentcanbe
designedtoonlyshareinsavings(upsidereward)orto
shareinlosses(downsiderisk).Insomecases,payers
willbeginwithupsiderewardsharingtoallowforthe
providertoestablishtheinfrastructureandreengineer
carepracticestobecomecapableofmanaging
downsideriskinthefuture.

SafetyNetProvidersandRisk
Aprimarygoalindesigninganyalternative
paymentmodelarrangementisguarding
againstunintendedconsequences.In
episodepaymentformaternitycare,the
unintendedconsequencethatconcernsall
providersbutperhapssafetynet
providersmostofallisthepotentialfor
decreasedaccesstocareforpatientswith
poorhealthstatus,whichputsthemat
increasedriskforpooroutcomes.Thismay
becorrelatedwithlowersocioeconomic
statusiftheproviderfeelsthatitwillnotbe
possibletoprovidethefullcontinuumof
careandachievepositiveoutcomeswithin
theepisodeprice.Safetynetprovidersin
particularmayneedtimetodevelop
adequatereportingandstaffing
infrastructure;andbuildrelationships
acrosshistoricallysiloedorganizationsin
ordertofeelpreparedtotakeontheriskin
anepisodepaymentmodel.

However,takingondownsideriskmaybedifficultfor
smallerproviders,includingmanyOB/GYN,family
physician,andmidwifepracticesthataretheproviders
bestabletosupportanewmodelofmaternitycare.
Further,inclusionofdownsideriskmaybeabarrierto
providerparticipationwhentheinitiativeisvoluntary.
Itisimportanttoacknowledgethatseveraloftheprimarygoalsofthematernitycareepisode(for
example,decreasingcesareanandNICUuse)willresultinlowerperpatientreimbursementforthe
hospital.Thismeansthatiftheclinicianpracticeistheaccountableentity,andthereisnoupsidereward
ordownsiderisktothehospitalwherethemajorityofbirthswilloccur,thentheprovidersthe
cliniciansandthefacilitieswillhaveverydifferentincentivestructures.Thissourceoftensionwillneed
tobeexplicitlyaddressed,possiblythroughsometypeofsharedaccountability,whichincludesthe
abilitytoshareinthesavingsorriskforanypotentialloses.
Toaddressconcernsrelatedtothelevelofrisk,payerscanutilizestrategiestolimitthatriskorto
transition(phasein)todownsideriskarrangementsovertime.Thisisparticularlyimportantifthe
initiativeisvoluntaryandparticipationwouldbelimitedwithouttheoptionforupsidesharedsavings
only.Decisionsabouttype,level,andtimingofupsideanddownsideriskillustratethetensionsbetween
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payersandproviders:moreattractiveriskarrangementsforpayersmaybelessattractiveforproviders
andviceversa.Consequently,intheprivatemarket,thesefactorswillbecomepartoftheongoing
negotiationsamongnetworkparticipantsandpayers.Inpublicprograms,thesenegotiationswillhappen
throughthepoliticalandpolicyprocessofrulemaking.
MechanismsforLimitingRisk
Thelevelatwhichthoserisklimitsaresetisacriticaldesignelement.Thereareseveralissuesto
consider,suchaswhethertheaccountableentitywillberequiredtopaythefulldifferencebetweenthe
totaldollarsovertheestablishedepisodepriceandtheactualepisodecostsbacktothepayer,or
whetherlimitswillbeestablished.Limitsareespeciallyimportantconsideringthatanaccountableentity
isaccountableforcareprovidedbyotherproviders.Inthecaseofmaternitycare,thefacilityaccounts
forthelargestpercentageofoverallcosts.Whattheaccountableentity(theclinicianpractice)ispaid
throughFFSpaymentislimitedcomparedtotheliabilityassociatedwiththeentirecostoftheepisode
overtheestimatesfortheentirepopulationofincludedbirths.
Oneriskmitigationstrategyalreadyaddressedislimitinghighriskcasesthroughexclusions.Following
areadditionalstrategiesusedbyvariousinitiativestolimitriskinanepisodepaymentwhilestill
maintainingasbroadanepisodepopulationasisfeasible.Theseareoften,butnotalways,usedin
tandem.
RiskAdjustment:Riskadjustingtheepisodeprice,basedontheseveritywithinthepopulationinthe
maternitybundle,isoneriskmitigationstrategy.Mostinitiativeswillincludealistofincludedand
excludedwomenandthenalsohavealistoffactorsthatwouldbeusedtoadjusttheepisodeprice.
Thereareavarietyofapproachestocapturingpatientcharacteristics,riskfactors,andotherparameters
thatpredictmaternitycareepisodeexpenditures.Forexample,theHealthCareIncentivesImprovement
Institutes(HCI3)evidencebasedcaseratescreateavarietyofpatientspecificepisodesthatrecalibrate
basedonvariouspatientspecificseverityfactors.ThematernitybundlesinTennesseearealsoadjusted
basedonavarietyoffactors,includingriskand/orseverityfactorscapturedinrecentclaimsdata,such
asearlylabor,preeclampsia/eclampsia,andbehavioralhealthconditions.Althoughriskadjustment
methodsarelimitedintheirpredictiveaccuracybasedonclaimsalone,overtime,thesefactorsand
theirweightscanbeupdatedtobecomemoreaccuratebasedonempiricalexperience.Atthesame
time,werecognizethatriskadjustmentcanpotentiallyleadtogaming.Forexample,aprovidermay
adoptmoreintensivecodingtoeitherincreasethereimbursement,ortoensurethepatientisnot
includedinepisodepopulation.Oraprovidermayrefermoredifficultpatientstootherpracticestolimit
theirownpaneltoonlythelowestriskwomen.Thiswillneedtobemonitoredtoensurethatcodesare
notbeingoverusedtoobtainhigherpaymentsratherthantoaccuratelyreflecttheconditionorriskof
thepregnancy.Forfurtherdiscussiononthistopic,pleasereadthepaper onFinancialBenchmarking,
clickhere.
StopLossCaps,RiskCorridors,andCapitalRequirements:Stoplosscapsarealreadydiscussedinthe
contextoftheincludedpopulationasonewaytolimittheriskofveryhighcostnewbornsatan
individualpatientlevel.Stoplosscapsalsocanbeusedonanaggregatelevelacrossthepopulation.Risk
corridorslimittheexposureoftheaccountableentitybyestablishinganupperlimitoverwhichthe
accountableentitywillnothavetopaybackanyamountofdollarstheoverallcostsoftheepisodesmay
goovertheestablishedepisodeprice.Thesecorridorscanalsobeplacedontheupsidereward,such
thattheincentivestolimitcarearenotasgreatastheywouldbeotherwise.Anotherriskmitigation
strategyistorequiretheaccountableentitytomaintainacertainlevelofcapital,sothatitcancover
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lossesandinvestinnecessaryinfrastructure.Whilethesetypesofarrangementsareoftenusedtolimit
insurancerisk,thesameconceptscanalsobeusedinthiscontexttolimitservicerisk.

10. QualityMetrics

Prioritizeuseofmetricsthatcapturethegoalsoftheepisode,including
outcomemetrics,particularlypatientreportedoutcomeandfunctional
statusmeasures;usequalityscorecardstotrackperformanceonquality
andinformdecisionsrelatedtopayment;andusequalityinformationandother
supportstocommunicatewith,andengagepatientsandotherstakeholders.

Awidevarietyofmeasuresareinuseformaternitycarethatcouldbeusedtosupportthegoalsand
operationofclinicalepisodepayment.Atthistime,theWorkGroupdoesnothavespecific
recommendationsforthemosteffectivemeasures,butratherprovidesexamplesofthetypesof
measuresofmaternityandnewborncarequality.TheWorkGroupalsonotestheimportanceofthe
developmentofpatientreportedoutcomesandfunctionalstatus(particularlypostpartum)measures.
Thosealreadyimplementingmaternitybundlesuseavarietyofmetrics,butthereseemstobetwo
primarycategoriesorstrategies.First,therearemeasuresofwhethercertainprocessesorserviceswere
providedduetoconcernsthattheymightbeunderutilizedabsentsomemechanismforaccountability
andbecausetheyarepracticesknowntoimproveoutcomes.Theseincludemeasuressuchasthe
numberofprenatalvisits,screeningtests,breastfeedingsupport,anddepressionscreening.Secondare
measuresofoutcomes,whichcancorrelatetochangesincaredelivery.Theseincluderatesofvaginal
births/cesareans,pretermandearlyelectivebirths,ratesofepisiotomy,exclusivebreastfeedinginthe
hospital,andpatientcomplications.Thesetwocategoriestogethercancapturethequalityofcare
deliveredintheprenatal,laborandbirth,andpostpartumtimeframe.
Inselectingthemetricsforanepisodepaymentmodel,itisimportanttorecognizethepreferencefor
alignmentofmeasuresacrossprograms,useofnationallyendorsedmeasures,andalimited,tightsetof
measureswithalowburdenofcollection.TheWorkGroupsupportstheseprincipleswhenevertheycan
bemetwithmeasuresthatincentpriorityopportunitiesforimprovingmaternitycare.Ameasurethat
meetsthesecriteriawithoutthepotentialforhighimpactamongchildbearingwomenandnewborns
wouldnotbeusefulforthispurpose.
PotentialMeasures:Inthespiritofbuildingonexistingmeasurementconsensusprocesses,theWork
GrouprecommendsconsiderationoftheapplicablemeasuresrecentlyreleasedfromtheCoreQuality
MeasuresCollaborative(CQMC)thatcouldbeusedinthematernitybundle(CentersforMedicareand
Medicaid,2015a).MeasuresintheCQMCOB/GYNCoreSetthatareonlyapplicabletogynecological
careandnotobstetriccarearenotincludedhere.However,measuresinthecoresetthatmaynotbe
considereddirectlyrelatedtomaternitycarebutareoftendeliveredeitherduringtheprenatalor
postpartumperiodareincluded.TheCQMCdividedthesetintoaccountabilityfortheOB/GYNandfor
thehospital/acutecaresetting,buttheycouldalsobeusedforqualitymeasurementofanepisodeof
care.

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CQMCmeasuresrelatedtotheambulatoryOB/GYNsettinginclude:

Frequencyofongoingprenatalcare;10

Cervicalcancerscreening;and

Chlamydiascreeningandfollowup.

CQMCmeasuresidentifiedforthehospital/acutecaresettingsinclude:

Incidenceofepisiotomy;

Electivedeliveryforvaginalorcesareanat>=37and<39weeksofgestationcompleted(PC01);

Cesarean(nulliparouswomenwithaterm,singletonbabyinavertexpositiondeliverybycesarean
section,PC02);

Antenatalsteroidsundercertainconditions(PC03);and

Exclusivebreastmilk(PC05).

CMSMedicaidandCHIPChildandAdultCoreMeasuresforMaternityCare:AsillustratedinTable7,
CMSworkedwithstateMedicaidagenciestodevelopacoresetofchildandadultmeasuresthatinclude
somematernitymetricsofimportancetothatcommunity.
Table7:MedicaidandCHIPChildandAdultCoreMeasuresforMaternityCare11

Source

AdultCore

ChildCore

CQMC

PC01:Electivedelivery

NQF0469

PC03:Antenatalsteroids

NQF0476

TimelinessofPrenatalCare

NQF1517

PC02:CesareanSection

NQF0471

Livebirthslessthan2500grams

NQF1382

Frequencyofongoingprenatalcare

NQF1391

Behavioralhealthriskassessment
forpregnantwomen

AMAPCPI

PediatricCentralLinkedAssociated
Bloodstreaminfections:neonatal
ICUandpediatricICU(CLABSI)

NQF0139

10

Status:ThismeasurewasrecentlyrecommendedforremovalofNQFendorsedmeasuresandtheMedicaidcore
setbyTheNQFPerinatalandReproductiveHealthStandingCommitteeandtheNQFMAPMedicaidChildandAdult
TaskForces
11

TheNQFMAPMedicaidChildTaskForcevotedtorecommendinclusionofPC05ExclusiveBreastMilkFeeding
(NQF0480)andtheequivalentPC05eMeasure(NQF2830)intheChildCoreSet.

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Postpartumcontraceptiveuse
amongwomenages1544

Source

AdultCore

ChildCore

CQMC

Developmen
talmeasure
(OPA/CDC)
NQF290212

Likelytobe
includedin
futuresets

OtherPotentialMeasures:
ThegenericConsumerAssessmentofHealthcareProvidersandSystems(CAHPS)patientexperiencesof
carefacility,clinician,andhealthplanmeasuresdonotmapwelltoantenatalthroughpostpartumand
newborncareandthispopulation.However,theremaybespecificCAHPSsupplementalitemsthat
couldbeofusetomeasurepatientexperience(AgencyforHealthcareResearchandQuality,2016).
Tomeasureexperienceofcarewithinitsepisodepaymentmodel,CommunityHealthChoice,a
maternityclinicalepisodepaymentinitiativeinTexasMedicaid,developedasurveybyselectingitems
primarilyusedinpreviousnationalListeningtoMotherssurveys.Topicsincludedthetimingand
communicationexperienceinprenatalcare,planningforthebirth,andthemothersexperienceafter
thebirth,whichincludescaregiverfollowupandheroverallsatisfactionwiththeexperience.
Functionalstatus,particularlyafterbirth,whenusedtocapturesuchselfreportedoutcomesaspain,
abilitytoperformactivities,anddepressionalsoneedsmorefocus.Itisatimeperiodthatsetsthestage
forthehealthoftherecoveringwomanandhernewborn.Functionalstatusinstrumentsarenot
routinelyusedintheinitiativeswehavereviewed,buthavebeenusedforpostpartumresearch,and
couldbedevelopedintosurveyinstrumentsforthiscontext.Researchonthesefunctionalstatussurveys
demonstratetheirabilitytomeasurepostpartumhealth.
Ameasureofpatientskills,knowledgeandconfidenceinmanagingoneshealththePatientActivation
Measure(NQF#2483:GainsinPatientActivation(PAM)Scoresfrom612months)woulddemonstrate
whetherthehealthsystemhasprovidedopportunitiestoincreaseactivationfromearlytolate
pregnancy.
Severalothermeasuresarealsoofinterest,includingratesofunexpectednewborncomplicationsand
ratesofvaginalbirthaftercesarean.Ratesofnewborncomplications,particularlyunexpected
complications(e.g.NQF0716),measuretheultimateoutcomeofthebirththebabyshealth.A
measureofthevaginalbirthaftercesarean(VBAC)rate(e.g.AHRQIQI134)couldaddressanimportant
opportunityforimprovementthatwouldbecomplementarytotheabovementionedcesareanrate.
Further,provisionofinfluenzavaccinesprenatallyalsohasbeenshowntodecreasecomplications.
Thesemeasuresarenottheonlyonesthatvariousinitiativeshaveused,andeachinitiativemaywantto
customizeitsqualitymetricstosomeextent,dependingontheneedsofitspopulation.
QualityScorecard:Acorefeatureofanyepisodepaymentinitiativeisusingperformancemetricsto
createscorecardstoensurehighqualitycaredelivery;informthedecisionsofthewoman,herfamily,
andherproviders;anddeterminepaymentlevels.
Mostepisodepaymentinitiativesuseaqualityscorecardwithdefinedthresholdsthataprovidermust
meetorexceedinordertoreceivethefullreimbursementforanepisodeorthefullsharedsavings.

12

Status:NQFReproductiveHealthStandingCommitteerecommendedendorsementofthismeasureinMay2016
andiscurrentlygoingthroughconsensusdevelopmentprocess.
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However,thedecisiononwherethosethresholdsaresetorhowtheyareusedshouldbeleftforthe
payerandprovidertonegotiate.Someinitiativesvarythelevelofsharedsavingsbasedonperformance
metrics,whileothersalsouseminimumperformancelevelsasathresholdforreceivinganyportionof
thesavings.Inaprospectivelypaidinitiative,itmaybeusefultowithholdsomeportionofthe
prospectivepaymentandbaseitspaymentorlevelofpaymentonperformanceonthequality
scorecard.
QualityInformationtoCommunicateandEngagewithPatients:Inadditiontousinginformationon
qualitytodeterminepayment,itisimportanttootherstakeholderstohaveaccesstodataonquality.As
discussedunderPatientEngagement,womenneedqualitydataontheperformanceofdifferent
facilitiesandonmaternitycareproviderstoinformtheirchoices.Currently,dataonmaternitycare
providerperformancearenotroutinelyavailableanddevelopmentisneededtosupportmore
widespreadandroutinedatacollection.
Comparativequalityinformationisalsoimportantforproviderstousetoimprovetheirperformance.A
providerportal,separatefromelectronichealthrecords(EHRs),whereproviderscanaccessindividual
averagequality,costs,andutilizationacrossepisodes,isonewaytoprovidethisinformation.The
Arkansasinitiativefoundthistypeofportaltobeimportantforproviders.
Employers,purchasers,andpayersalsoneedthesedatatodevelopprovidernetworksandtohelp
employeesmaketheseimportantchoices,bothbeforeandduringpregnancy.Specifically,employees
needtounderstandthebundleandwhattheirroleisinreceivinghighqualitycare.Primarycare
providershopingtoenterintobundledpaymentcontractswillwantdataaboutspecialtyphysician
qualityperformanceinordertodeterminewhichbundledarrangementswouldbemostbeneficialto
theirpatientpopulation.
Finally,episodepaymentdesignmustbuildinthecapacitytocollect,analyze,andprovidedataand
supportpatientsinidentifyingandinterpretingthisinformation.Theuseofpatientnavigatorsfor
whomsomeexistinginitiativeshavesubstitutedcommunityhealthworkerscanbehelpfulinproviding
thissupport.First,however,theinformationitselfmustbeavailable.Itisimportant,therefore,to
establishcrosscuttingeffortstodefinemetricsandsystemsfordatacollectionandanalysis.Itisa
significantburden,however,foreachinitiativetodefineitsownmetrics,collectionsystem,and
scorecard.Broadereffortsareneededtobuildthenecessaryinfrastructureformeaningfuldevelopment
anduseofqualityperformanceinformation,andbuildingthese systemsisoneofthekeychallenges
discussedintheOperationalConsiderationssectionofthisWhitePaper.Toread moreabout
PerformanceMeasurement,clickhere.

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Chapter5:CoronaryArteryDisease
Background
AccordingtotheNationalCenterforChronicDiseasePreventionandHealthPromotionsDivisionfor
HeartDiseaseandStrokePrevention,coronaryarterydisease(CAD)isthemostcommontypeofheart
diseaseinAmerica.IntheUnitedStatesin2010,about20%ofthe65yearoldandoverpopulationwere
livingwithCAD.Thisconditionisalsopresentinabout7%ofthepopulationwhoarebetweentheages
of45and64.PatientswithCADoftenexperiencecomorbiditiessuchasdiabetesandobesity.Thetwo
proceduresmostcommonlyusedtotreatCADpatientsPCIandCABGaccountformorethanone
millionproceduresdoneannuallyintheUnitedStates.Thisamountedtoacostofmorethan$15billion
ofhealthcarespendingin2012.Thesefiguresdonottakeintoaccounttheadditionalcostsof
hospitalizationbeforeandaftersurgery;accordingtotheU.S.CentersforDiseaseControl,theaverage
costofhospitalizationforacoronarybypassin2013was$38,707perperson.Thenationalexpenditures
forCADrelatedhospitalizationin2013cametoatotalof$6.4billion(CentersforDiseaseControland
Prevention,2014).
PatientswithCADexperiencetheirillnessinmanydifferentways.Somepatientsarediagnosedduetoa
triggeringevent,suchasanacutemyocardialinfarction(AMI)orheartattack.Othersarediagnosed
followingeitheracuteorroutinediagnostictestingthatresultsineithertheneedformedical
managementoraprocedurelikePCIorCABGsurgery.WhileCADhasavarietyofmanifestationsand
acuities,acommonthreadthattiesalmostallCADpatientstogetheristhefactthatCADisachronic
condition;thosewhoarediagnosedwithitwilllikelyhavetolivewithitfortheremainderoftheirlives.
Thewayinwhichapatientisfirstdiagnosed,aswellasthesettinginwhichcareisdelivered,canhave
animpactonthecostandintensityoftreatment.IncaseswhereapatientneedsaCADrelated
procedure,multipleprovidersparticipateineachpatientstreatmentcourse.Thiscanleadto
fragmentedanduncoordinatedcare.Forexample,thetypicalsettingsforCADcareincludeprimaryand
specialtycaresettings;hospitalinpatientandoutpatientsettings;postacutecarefacilities,suchas
cardiacrehabilitationcenters;andpatientshomes(viahomehealth).PatientsmayreceiveCADcarein
morethanonesettingastheirtreatmentevolvesovertime.Currently,eachofthesesettingsreceives
paymentseparatelyfortheservicestheyprovide.Therearefewincentivestosupporttheprovisionof
caremanagement,preventiveservices,efficientandsparinguseoftestsandprocedures,and
coordinationofcareacrossthesediversesettings.Thislackofcoordinationandincentivesfordelivering
highvaluecareacrossthecontinuumtoooftenresultsinrelativelyhighratesofadversedrugevents,
hospitalindexadmissionsandreadmissions,diagnosticerrors,andlackofappropriatepreventive
servicesandfollowuptestingforpatientswithCAD(Riegel,n.d.).
ItisforpreciselythisreasonthattheCEPWorkGroupchosetodevelopaconditionlevelepisodemodel
forthemanagementofCAD.WhilePCIandCABGprocedures,andincidencesofacuteAMI,are
significantdriversofCADrelatedcosts,patientswithCADneedamorecomprehensiveapproachto
managingtheirconditionsandseekingpositiveoutcomesthathelppreventtheneedforprocedures.A
numberofgoalsassociatedwithimprovingoutcomesforCADpatientsarebeyondtherealmofaPCIor
CABGprocedure;foreachgoal,thereareleversthatcanbemovedusingthetypesoffinancial

incentivesinherentinepisodepayment(Table8).

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Table8:AvailableLeversforAchievingOutcomeGoals

SystemLevel

Levers

Goals

Increasingtherateofprovisionof
therightcareattherighttimein
therightsetting

Deliveryofimagingdiagnosticsand
lowacuityproceduresinthemost
appropriateandefficientsetting

Reducingavoidablecomplications

Reducingunwarrantedand
unjustifiablevariationincare

Providingoptimalmedication
management

Coordinatedandinnovativecare
transitionprocesses

Improvingqualityoflifefor
patients

Innovativedeliveryofcoordinated
preventivecare

Increasingsymptomfreedays

Diseasemanagement

Reducingacutemyocardial
infarctions

Lifestylechanges

Patientcentereddischargeprocesses

Coordinationofpostacutecare

Coordinatedandinnovativecare
transitionprocesses

Rapidreturntonormal
activities

PatientLevel

Increasingpreventivecareand
preventingacuteeventsthat
resultinhospitalization

Increasingpositiveoutcomesfor
acutecarepatients

TheValueofEpisodePaymentforCAD
TraditionalFFScreatesincentivesforprovidingahighquantityofservicesandtreatments,potentially
rewardingboththeuseofexpensivetreatmentsandtestsregardlessofvaluetothepatient,and
avoidableinvasiveproceduresandhospitalizations.EpisodepaymentforCADestablishesabudgetthat
incentivizestheprovidersmanagingthepatienttomoreappropriatelybalancetheneedsofthepatient
andthenumberandtypeofservicesprovided.Placingaccountabilityfortheentireconditionwitha
designatedprovideralsoencouragestheactivemanagementofthepatientinordertopreventacute
eventsthatleadtoworseninghealth,furtherprocedures,andanincreasedriskofoverallpoor
outcomes.Thegoalofpersoncenteredepisodepaymentistomakethepatientthefocusofcare
management,ensuringthatanyefficienciesachievedthroughimprovedcarecoordinationand
managementfirstandforemostbenefitthepatient.
Placingaccountabilityfornecessarycardiacprocedureswithadesignatedproviderencouragesthat
providertoensurethecarethepatientreceivesbefore,during,andaftertheprocedureisasefficient
andeffectiveaspossible.Forexample,optimalprovisionofpreventiveandcaremanagementservices
hasthepotentialtoreducetheneedforacuteeventslikeAMIandhasthepotentialtoreducetheneed
forproceduressuchasPCIandCABG.Andabundledpaymentprogramcreatesincentivesformore
appropriateuseofprocedureswhentheyarenecessary,versusthecurrentvolumebasedincentives
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thatcanleadtooveruse.Thereareanumberofinitiativesunderwaytoaddressthegrowingcostofcare
forpatientswithCAD.WhileafewareexploringhowtoefficientlypayforCADfromthecondition
perspectiveforexample,BlueCrossBlueShieldofTexas[BlueCrossBlueShieldofTexas,2016]and
theNewYorkStateDeliverySystemReformIncentivePayment[NYSDSRIP]Program[NewYorkState,
2016]mostaredesignedtoefficientlydeliverhighqualityPCIandCABGprocedures.Theprocedure
basedmodelsinTable9aredescribedinmoredetailinAppendixE.

Table9:ExamplesofCurrentCADProcedureEpisodeModels
CABG
PCI
ArkansasPaymentImprovement
ArkansasPaymentImprovement
IncentivesProgram
IncentivesProgram
GeisingerProvenCare
GeisingerProvenCare
MedicareBundledPaymentsforCare
MedicareBPCI
Improvement(BPCI)
PROMETHEUSPayment
OhioHealthTransformation
WashingtonStateBreeCollaborative
PROMETHEUSPayment
TennesseeHealthCareImprovement
InnovationsInitiative

TheCADepisodedescribedinthispapercombinesconditionlevelmanagementwithanestedbundle
forthepaymentofaprocedure,ifoneisdeemednecessaryandappropriate(Figure9).Thesetwo
componentswillbereferredtoasconditionandprocedureinthesubsequentrecommendations.
Thegoalofthisdesignistoprovideincentivesfor:

HighqualityCADconditioncareandmanagement;

AppropriateuseofCADprocedures;and

Coordinationamongtheallproviders,includingthosewhooverseeconditionmanagementand
thosewhoperformtheprocedure.

Giventhenumberofprocedurelevelepisodeexamplesavailable forreference(AppendixE),the
discussionpresentedbelowfocusesprimarilyontheconditionleveldesignrecommendationsandthe
issuesthatariseintheintersectionbetweenconditionmanagementandprocedureprovision.TheWork
Groupadviseslookingtoexistingprocedurelevelepisodesforspecificexamplesofhowtostructurea
procedurebundle.
TheCEPWorkGrouprecognizesthataconditionlevelbundledpaymentapproachforCADwillnotexist
inavacuum.Tightlyintegratedhealthsystems,forexample,mayalreadybeoperatingmultiplebundles
forotherconditionsandimplementingprimarycaremodelsthatrequiremanagementacrosschronic
conditions.ThesescenarioswillcertainlyaffecthowaCADepisodeisdesignedandimplemented.
Implementationinmarketsthatarelessintegratedwillsimilarlybeaffectedbyenvironmentalfactors.
TheCEPWorkGroupbelievesthisapproach,whilechallenging,balanceswhatisfeasibleand,insome
cases,alreadyinpracticetoday,withanaspirationalvisionthatcanbeadaptedtomeetfuture
innovations.Figure9depictsthesettings,providers,andgoalsthatcompriseCADcare,allofwhich
informedtheWorkGroupsdecisiontodevelopanestedepisodemodel.

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Figure9:NestedCADEpisode

TheCADepisodemodelisdesignedto:

Achieveimprovementsinpatientoutcomesandeachpatientsexperienceofcare;

Incentivizethecardiologist/primarycareprovider(PCP)toemploylowresourcetoolssuchas
medicationandlifestylechangestomanagethepatientsconditioninordertoavoidtheneedfor
procedures;

IncentivizeappropriateuseofhighresourceproceduressuchasPCIandCABGtoensurethatother
noninvasiveoptionsareconsideredwherefeasible;

ProvideappropriatecaretoallpatientsandlimitthepotentialforwithholdingappropriateCAD
managementservicesinordertoreducetheriskofcomplicationsthatcouldcountagainstthe
episodepricefortheaccountableprovider;

IncentivizecoordinationamongthePCPand/orcardiologisttocoordinatesurgeonsandothercare
teammemberstodriveimprovedpatientoutcomeswhenproceduresarerequired;

Optimizethedeliveryofprocedureswithinthecontextofconditionmanagementtoalignincentives
acrossPCPs/cardiologistsandintensivists/surgeons;and

Motivateexpandedtransparencyofclinicalqualityinformationforbothprovidersandpatients
tofacilitatemanagementofthecondition.

Recommendations:CoronaryArteryDisease
TheCEPWorkGroupreviewedarangeofexistingepisodepaymentinitiatives(seeAppendixE).Based
ontheirexperienceandtheanalysisofcurrentinitiatives,theWorkGroupdevelopedrecommendations
ontheelementsthatreflectthedecisionsthatpayersandprovidersneedtomakepriorto
implementation.
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Forcoronaryarterydisease,itisimportantforCEPinitiativestoincludeincentivesforongoingcondition
managementtopreventexpensiveandcomplextreatmentssuchasPCIandCABGwhenever
possible.Episodepaymentalsoensuresamorecomprehensiveanalysisoftheappropriatenessofthese
procedures.Further,manyefficienciesandimprovementsincarecanalsobeachievedthroughepisode
paymentincentivesfortheprovisionoffollowupcareassociatedwiththoseprocedures,iftheyare
needed.Therecommendationsbelowreflectthesegoals.

1. EpisodeDefinition

TheepisodeisdefinedascareforacohortofpatientswithdiagnosedCAD,
fora12monthperiodthatwillultimatelyalignwiththebenefityear
(seeEpisodeTiming).Oncealignedwiththebenefityear,theepisodewill
continueforconsecutiveperiodsof12monthsofactivecaremanagement
foraslongasapatientisunderactivemanagementforCAD.PCIand/or
CABGproceduresdeemednecessaryduringanygiven12monthepisode
periodwillalsobedeliveredwithinanepisodepaymentmodel.

TheCADepisodeproposedbytheCEPWorkGroupcombinesconditionlevelmanagementwitha
nestedprocedurebundle.ThisisanimportantdistinctionfromthemajorityofexistingCADrelated
episodepaymentmodels,whichfocussolelyonPCIorCABG.Therearetwocomponentswithinthe
nestedepisode:Theconditionepisode,whichisdefinedasa12monthperiodofactivemanagementof,
andcarefor,apatientwhoisdiagnosedwithchronicCAD,andtheprocedureepisode.
TheCADconditionepisodeincludespaymentfor12monthsofpreventivecare,diseasemanagement,
andanynecessaryproceduresandfollowupcareforthoseprocedures.RecognizingthatCADisoftena
chronic,lifelongcondition,anew12monthepisodeperiodwillbeginasthepreviousperiodends,for
aslongasthepatientisinneedofactivemanagementforCoronaryArteryDisease.Aswillbediscussed
inthenextrecommendationonEpisodeTiming,apatientsinitialentryintotheepisodemaylastfor
fewerthan12months,dependingonwhethermodelisdesignedtorollpatientsintotheepisodeatthe
beginningofthemonthorquarterfollowingdiagnosis.However,bytheirsecondyearofreceivingcare
throughthisepisode,everypatientwouldbeina12monthconditionmanagementtimeframe,
beginningatthestartoftheplanbenefityear.
ThenestedprocedureepisodeisasubbundledpaymentforthedeliveryofaCADrelatedprocedure
(PCIorCABG)withinthecourseoftheconditionepisode.ForCAD,theprocedureepisodeisdefinedas
anelectiveoremergentprocedurePCIand/orCABGfortheacutetreatmentofCAD.TheCEPWork
Grouprecommendsreviewingexistingprocedureepisodemodels,suchasthosesummarizedabovein
Table2,anddeterminingwhichonesworkbestwithintheirmarket.
Whilethegoalofthisepisodeistobeasinclusiveaspossible,itwillonlyapplytopatientswhoreceivea
CADdiagnosis.Thisdiagnosismayemergefromeitheranonemergentpresentation(e.g.,shortnessof
breaththatleadstodiagnostictestingandadiagnosisofCAD)oranemergentpresentation(e.g.,an
AMIoracutePCI).Identificationofpatientsforthisepisodeisdiscussedindetailbelow.

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2. EpisodeTiming

The12monthconditionepisodemaycommenceatvariouspointspostdiagnosis;
theprocedureepisodebegins30dayspreprocedure
andlasts3090dayspostdischarge.

Theepisodeperiodincludes12monthsofcare,whichbythepatientssecondyearintheepisodeat
thelatestwillrunconcurrenttoanindividualscoveragebenefityear(Figure10).Itisexpectedthat
mostpatientswillcontinuetobeincludedinaCADepisodeformultipleyears,giventhechronicnature
ofthecondition.Thereareoptionsregardingatwhatpointtheconditionepisodeshouldbeginafter
CADdiagnosis.
1. BeginattheNextBenefitYear:GiventhatpatientsarediagnosedwithCADthroughouta
benefityear,oneoptionistoflagthesepatientsandincludethemintheepisodeatthe
beginningofthenextbenefityear.Thissimplifiesoperationalizationoftheepisode,including
thecollectionofqualitymeasurementdata,andreconciliationofpayments,andprovides
purchaserswithimportantinformationthatcanbeusedwhennegotiatingbenefitcontracts
withpayers.Withinthe12monthperiod,anyprocedurethatisdeemednecessary,using
establishedappropriateuseguidelines,shouldbepaidforusinganepisodepaymentmodel.The
concernthatcostlyproceduresthatmaynotbenecessaryorappropriateforthepatientwillbe
frontloadedinthetimebetweendiagnosisandthestartoftheepisodeisthedownsidetothis
design.Onestrategytomitigateunintendedconsequencesofthisdesignmaybetocreatea
resourceusemonitoringwindowofseveralmonthspriortothestartofthebenefit.

2. BeginontheFirstDayoftheNextMonth(orFirstDayofNextQuarter):Whileoperationally
morecomplex,establishingtheepisodestartingpointasthebeginningofeitherthemonthor
thequarterfollowingadiagnosiswilladdress,butnotcompletelyeliminate,concernsabout
potentialunderoroveruseofservices.Inthisoption,thepatientsfirstyearintheepisode
wouldbeonlyaslongastheremainingnumberofmonthsinthebenefityear.Inthefollowing
year,theepisodestartwouldalignwiththebenefityear,andthepatientwouldexperienceafull
12monthepisodeperiod.Thisoptioncombinesthebenefitofreducingpotentialunderorover
useofcertainservicesorprocedureswiththebenefitofadministrativeeaseinthepatients
secondyearandbeyond.

Forpayers,oneimportantfactortoconsiderwhendesigningtheepisodestartisthemethodby
whichpatientsettlementandreconciliationisprocessed.Aprocessinwhichepisodesaresettledon
acasebycasebasiswillaccommodategreaterflexibilityandallowpatientstobemovedintoan
episodicincentiveinitiativeonarollingbasis.Ifapayersettlesepisodesbasedonaveragesovera
performanceperiod,theremaybelessroomforflexibilityinthestartingpoint.

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Figure10:CADEpisodeTimeline

IntheeventofPCIorCABG,thestartoftheepisodedependsonwhetheritisacuteornonacute.Ifitis
anelectivePCI,theepisodebeginswitha30daypreoperativeperiod.Theinclusionofapreoperative
periodwillsupportcoordinationacrossthemultipleprovidersinapatientscareteamandserveto
reduceunnecessaryresourceutilizationleadinguptotheprocedure.Ofcourse,CADproceduresarenot
alwayselective;inthecaseofanemergencyprocedureofeitherPCIorCABG,theepisodebeginswhen
itisdeterminedthataprocedureisnecessaryandappropriate.Thatmayoccurassoonas24hoursprior
totheprocedure.
TheWorkGroupdidnotdeveloprecommendationsforthelengthoftheprocedureepisode.Therearea
numberofexistingPCIandCABGmodels(Figure10)towhichreaderscanrefertoweighthebenefitsof
extendingtheprocedureepisodeto30,60,or90dayspostdischarge.Itmayalsobeusefultobuildina
30daylookbackperiodfromdiagnosestocapturethecostsoftheworkuptoobtainthediagnosis.The
longertheprocedureepisode,themorepostacuteserviceswillbeincluded.Theconditionepisodewill
runconcurrentlywiththeprocedureepisode.Inotherwords,the12monthconditiontimeperiodwill
notpausewhileapatientisexperiencingaprocedure.Thisisdeliberate,toincentivizeseamless
transitionsbetweeneachstepinthecarecycle:Conditionmanagement,surgicalprocedure,
hospitalization,discharge,postacutecare,andagain,conditionmanagement.However,ifaprocedure
isnecessaryandthepatienthasnotyetbeendiagnosedwithCAD(soitisnotpartofthecondition
basedCADepisode),theprocedurebaseddefinitionswillapply,andtheconditionlevelepisodewill
commenceineitherthenextmonth,quarterorbenefityeardependingonthedesignofthemodel.

3. PatientPopulation

Condition:PatientsdiagnosedwithCADandinsamehealthplan
forfull12months.
Procedure:PatientsdeemedtoneedaPCIorCABGbased
ondeterminationofappropriateness.

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Thepopulationofpatientswhocouldparticipateintheconditionepisodeisbroadandincludesall
patientsflaggedbyaproviderasdiagnosedandunderactivemanagementforCAD.Individualswho
disenrollfromtheirhealthplanpriortotheendofthe12monthepisodeperiodwillberemovedfrom
theepisodepopulation.
Healthplansshouldanalyzeclaimsfromatleasttheprevious12monthstoasfarbackas24monthsin
ordertoidentifyallpatientswhofitthispopulationdefinition.Thegoalofthisepisodemodelisto
improvethevalueofcaredeliveredtohighneedpatients.TheWorkGrouprecognizesthatfor
individualswhohavebeenlivingwithCADformanyyears,activemanagementtendstoevolveintoan
annualvisittotheproviderforongoingmedicationmanagement.Whilethesepatientscanbeincluded
intheepisode,doingsomaynotaddadditionalvalue.Establishingaminimumnumberofvisitsorclaims
tobeeligibleforinclusioninanepisodepaymentcouldbeonewaytoaddresspatientswithlimited
ongoingneededCADmanagement.Thiscouldalsostrengthenthedeliveryofcarereceivedthrough
primarycaremodels.AnimportantissueforpayersandproviderstoexaminewhendesigningaCAD
conditionepisodemodelishowtoaddressthevariationinCADseverityacrossapatientpopulation.
OnewaytoaddressthisistoestablishpatientcohortsdefinedbywhetherapatientsCADisstableor
unstable,orbywhethertheyrequiremedical,surgical,orpercutaneoustreatment.
ThepopulationfortheprocedureepisodecomprisespatientswhoaredeemedinneedofaPCIorCABG
procedureinordertomanagetheirCAD.ProvidersshouldusesuchtoolsastheAppropriateUseCriteria
forCoronaryRevascularizationGuidelines13and/ortheappropriatenessguidelinesdevelopedbythe
SocietyofThoracicSurgeons(STS)todeterminewhetherapatientshouldundergoanonacute
procedure(Patel,2012;AmericanAssociationforThoracicSurgery,2016).
Inadditiontoappropriateusecriteriaandguidelines,othermodelsexistfordeterminingtogetherwith
apatientwhetheraprocedureisappropriate.OneexampleistheHeartTeam14approach,created
foruseintheTransCatheterAorticValveReplacementProgram.Forpatientsinthisprogram,aHeart
Teamconsistsofavarietyofcliniciansincluding,butnotlimitedto,acardiologistand/orprimarycare
provider,cardiothoracicsurgeon,cardiacanesthesiologist,andhospitalist.TheHeartTeamservesto
reviewcasesinwhichapatientisreferredforinvasiveCADtreatmentbyassessingpatientdata,
consultingwiththepatientandfamily,anddiscussingbestoptionsforcare.Thismodelwouldrequire
considerationofappropriatereimbursementwithintheepisodepriceifincludedinanepisodedesign.

13

TheAppropriateUseCriteriaGuidelinesweredevelopedbyaconsortiumthatincludestheAmericanCollegeof
CardiologyFoundation,theSocietyforCardiovascularAngiographyandInterventions,theSocietyofThoracic
Surgeons,theAmericanAssociationforThoracicSurgery,theAmericanHeartAssociation,theAmericanSocietyof
NuclearCardiology,andtheSocietyofCardiovascularComputedTomography.
14

SocietyforCardiovascularAngiographyandInterventions,TheRevascularizationHeartTeam:TakePatient
CenteredCaretoHeart,August26,2014,http://www.scai.org/QITTip.aspx?cid=e7ec55bc8e924fcd8b4d
4cb73bd8af5b
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4. Services

Forboththeconditionandprocedureepisodes,theservicesshould
includecoreservicesforCADmanagement(e.g.,lifestylechanges,
medicationmanagement,andsecondaryprevention);andcoreservices
forthequalitydeliveryofaprocedure(e.g.,preoperativediagnostics,
drugsanddevices,caretransitionsupport,and

postacutecareincludingcardiacrehab).

ThegoaloftheepisodepaymentforCADistoensurethatpatientsreceiveallappropriateservices
neededtoimprovetheirqualityoflife,managetheirCAD,andpreventtheneedforproceduresand/or
preventpoorhealthoutcomessuchasAMIorheartfailure,whileavoidinginappropriateservices.To
achievethis,theepisodeservicesshouldstriveforinclusivityandcomprisethefollowingcoreservices,
manyofwhichfallintothecategoryofsecondarypreventionforpatientswhoarediagnosedwithCAD
followinganacuteoremergencyevent:
OverallManagement:Servicesshouldincludeappropriatediagnostics,sharedcareplanning,and
coordinationofservicesacrossvarioussettingsandproviders.
MedicationManagement:CADpatientsareoftenputonalongtermmedicationregimentocontrol
CADsymptoms.Thesemedicationsmayincludeaspirin,betablockers,anginacontrolmedication,ACE
inhibitorspostAMI,andlipidmanagementmedications.Ensuringthatmedicationistaken
appropriately,managingmedicationsideeffectsandpooroutcomesduetocontraindicationsfrom
othermedications,isakeypartofCADconditionmanagementcare.
LifestyleSupportRelatedtoModifiableRiskFactors:Thereareanumberofriskfactorscorrelatedwith
CAD,includinghighbloodpressure,smokingandtobaccouse,diabetes,stress,andweight.ClinicalCAD
managementshouldincludeservicesdesignedtosupportlifestylechangesthataddresstheserisk
factors.Servicestosupportweightloss,stressreduction,smokingandtobaccocessation,anddiabetes
controlarecriticaltoCADmanagement.
ServicesSpecifictoPCIandCABG:Theconditionepisodeandtheprocedureepisodeshouldincludeall
preoperativediagnosticsandcareplanning,drugsanddevicesrelatedtotheprocedure,discharge
planning,caretransitionsupport,andpostacutecare,includingcardiacrehab.Itisextremelyimportant
toincludecardiacrehabintheprocedurebundle,giventhatfewer than20percentofpatientseligible
forthiscaregoontoparticipateinacardiacrehabilitationprogram.RefertoresourcesinAppendixH
formoreinformationonspecificservicesincludedinPCIandCABGepisodepaymentmodels.Oneissue
toconsideriswhetherapatientwhoreceivesaconcomitantproceduresuchasavalvereplacement
duringthecourseofaCABGshouldbeincludedinthenestedprocedureepisode.Examplesofhow
CABGepisodepaymenthasbeendesignedandimplementedwillprovideguidanceonquestionsrelated
towhatservicesandpotentialconcomitantproceduresshouldbeconsideredwithinthescopeofthe
CADprocedureepisodemodel.
Forbothconditionandprocedureepisodes,thepaymentmodelwillrelyonstrategicallyselectedquality
measurestoholdprovidersaccountablefordeliveringappropriatecare.Thetypesofservicesdescribed
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abovearealsoservicesthatareprovidedbyprimarycareproviders.Itwillbecriticalforthosethat
managetheseepisodestocoordinatewith,andbuildupon,thecarethatisalreadybeingprovidedina
primarycarecontext.Thiswillbeparticularlyimportantifotherpaymentreforms,suchasPatient
CenteredMedicalHomes(PCMH),areinplacebecausethosepracticeswillalsohaveaccountabilityfor
thecostsandqualityofcareforthatpatientlivingwithCAD.TheboxatrightdescribesComprehensive
PrimaryCarePlus(CPC+),oneprominentupcomingprimarycarerelatedinitiative.
AchallengeindefiningthecoreservicesforCAD
isthefactthatpatientswithCADoftenhave
comorbiditiessuchasdiabetes,hypertension,
kidneydisease,obesity,andperipheralvascular
disease.Whileacardiologistisnotgoingto
manageapatientschronickidneydiseasecare,
heorshemayhaveaninterestinworkingwith
thepatienttomanagetheirdiabetesorweight,
sincebothwillhaveanimpactontheefficacyof
theirCADcare.Thequestionofwhatservicesto
include,andwhethertheyarecodedforCAD
care,diabetescare,orothercomorbidities
associatedwithCADwillneedtobeaddressed
formultiplereasons.Determiningthelistof
servicestoincludewillhaveadirectbearingon
thelevelatwhichtheepisodepriceisset,and
determininghowtocodeservicesthatare
relevanttocareforCADanditscomorbidities
willhaveadirectbearingonwhetheraprovider
isdeterminedtohavecomeunder,over,orhit
theepisodepricetargetatthecompletionofthe
episode.Forexample,thereisthepotentialfor
codinglifestylechangesupportservicestothe
diabetesconditioninsteadofattributingthat
spendingtotheCADepisodeifaprovideris
participatingintheCADepisodebutnotasimilar
episodefordiabetes.

TheComprehensivePrimaryCarePlus(CPC+)
InitiativeandCADEpisodePayment
TheCenterforMedicareandMedicaid
Innovation(CMMI)recentlyannouncedthe
ComprehensivePrimaryCarePlus(CPC+)
initiativetosupportthedeliveryofcarevia
advancedprimarycaremedicalhomes.TheCPC+
initiativebuildsonthefoundationofthe
ComprehensivePrimaryCare(CPC)initiative,
whichconcludesinDecember2016.
ThehallmarkoftheCPC+initiativeisitsmulti
payerpaymentredesignfocus,whichwillinvolve
coordinationacrossCMS,commercialinsurance
plans,andstateMedicaidagenciestosupport
primarycarepracticesinmakingsignificantand
fundamentalchangesinhowcaredelivery
occurs,toachievethegoalsof1)accessand
continuity,2)caremanagement,3)
comprehensivenessandcoordination,4)patient
andcaregiverengagement,and5)plannedcare
andpopulationhealth.
Giventherolethatprimarycareprovidersplayin
thecaremanagementofpatientswithCAD,itis
possiblethatCPC+initiativeparticipantsmayalso
considerimplementationofthisCADepisode
model.Itwillbeimportanttoconsiderthe
implicationsoftheCPC+initiativeontheepisode
designandimplementationaspartofthedesign
process.

Onestrategyfordeterminingcoreservicesisto
includethosewithaCADrelateddiagnosiscode.
ServicesthatwilladdressneedsrelevanttoCAD
andothercomorbiditiesshouldbeincluded.Itis
alsopossiblethatthiswillnotbeanissuefor
primarycareproviderswhoareworkingwithina
systemthatoperatesmultipleepisodepaymentmodels.Ultimately,whethertheimplementing
organizationseekstodevelopadiscreteCADepisodemodel(i.e.morenarrowlydefinedservice
inclusions)orifithasalreadyestablishedotherepisodepaymentmodelsthatitwantstobuildupon(i.e.
broadersetofserviceinclusions)willdeterminehowbroadtheserviceinclusionswillbeinthisepisode.

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5. PatientEngagement

Modelsshouldsupportpatientandfamilyinvolvementinepisodepayment
design,implementationandevaluation;aswellaspatientandfamilyengagement
inallphasesofcardiaccare,facilitatedbyHealthInformationTechnology.

Personcenteredepisodepaymentmodelshaveastronginvestmentinengagingpatientsinmultiple
ways,includingthroughsharedcareplanning,shareddecisionmaking,comparativequalityinformation,
carecoordination,chronicdiseasemanagementtools,transparencyofpaymentinformation,andcare
transitionsupport.Examplesofthetypesofprocessesandtoolsdescribedinthissection arein
AppendixH.Tobeeffective,communicationsandresourcesmustbetailoredtothehealthliteracylevel
ofpatientsandfamiliesandlinguisticallyandculturallyappropriate.
Supported,SharedCarePlanning:Providersshouldincorporatesharedcareplanningearlyinthe
deliveryofcare.Thisprocessshouldincludecollaborativeproviderpatientgoalsettingrelatedtoboth
thecareforCADasaconditionandanygoalsettingrelatedtoaPCIorCABGprocedure.Sharedcare
planningalsoinvolvesongoingdecisionmakingandmonitoring,usingdocumentedindividualizedcare
plansthatareaccessibletothepatient,families,andproviders.
SharedDecisionMaking:Overthecourseofconditionmanagement,apatienttogetherwithafamily
caregiverideallymusthavetheopportunitytoengageinshareddecisionmakingduring1)theprocess
ofdevelopingacareplanthatsupportsthepatientsgoals,values,andpreferences,includinghowbest
tomanagetheirconditionthroughmedicationandlifestyleapproaches;and2)determiningwhetherto
undergoaPCIorCABGprocedure.However,theshareddecisionmakingprocesscannotbeacheckthe
boxactivity.Thereneedstobeevidencethatthepatientandfamilycaregiverweresupportedbya
decisioncoachoranurseeducatorastheyworkedwithadecisionaidthatmeetsathresholdscore
usingtheInternationalPatientDecisionAidsStandards(IPDAS).
ComparativeQualityInformation:Patientsandfamilycaregiversmustbeprovidedwithinformation
abouttheprocedurecomplicationratesandqualityofpossiblesurgeonsandpossibleacutecare
facilities.Clearlydesignatedpersonnelwithoutconflictsofinterestshouldassistpatientswith
identifyingeligibleprovidersandinfindingandinterpretingrelevantinformationaboutthoseproviders.
Transparencyofqualityinformationmayalsoallowthepatienttogetherwiththeproviderand
familytomakeinformeddecisionsontheinclusionofcertainprovidersonthecareteam.
CoordinationAcrossProviderSettings:Carecoordinationtakesvariousforms,includingthefollowing:

PatientCenteredTransitionalCareServices:TheCADmodeldescribedhereinisdesignedtosetup
tightcaretransitionlinkagesbetweentheprovidersoverseeingapatientsprocedureandthose
overseeingapatientsoverallCADcaremanagement,andthepatientsprimarycareproviders.
Withinthiscarecoordination,however,istheoftenchallengingaspectofcareknownascare
transition.Followingdischargefromahospital,49%ofpatientexperienceatleastoneerrorin
medicationcontinuity,diagnosticworkup,and/ortestfollowup,19%to23%ofpatientssufferan
adversedrugevent,andin75%ofcases,dischargesummariesforapatientdonotarriveatthe
physiciansofficeintimeforthefollowupappointment(Tsilimingras&Bates,2008).ACADepisode
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modelneedstoengagepatientsintransitionalcareservicestobesuccessful.Duringthetransitional
time,providersmustcommunicatewitheachother,familycaregiversmustbeengagedandinvolved
inpostacutecareplanning,andpatientsmustbegivenclearinformationonhowtomanagetheir
condition.Thefollowingprogramsreflectanumberofdifferenttoolsandmodelsfortransitional
care:
TheAcuteCareforElders(ACE)programstartsdischargeplanningatthetimeofadmissiontothe
hospital.
TheCareTransitionsCoachingprogramattheUniversityofColoradousesatransitioncoachto
teachpatientsandcaregiversskillsthat
promoteandsupportcontinuityofcare,
DeployingMeaningfulSharedDecisionMaking
bothinthehospitalandfor30dayspost
forPatientsandCaregivers
discharge.
Requiringproviderstouseshareddecision
TheAmericanCollegeofCardiologyand
makingtoolsdoesnotnecessarilytranslateinto
theInstituteforHealthcare
meaningfulshareddecisionmakingprocess
ImprovementsH2HHospitaltoHome
betweenapatientwithhisorherfamily
QualityInitiativefocusesonpost
caregiversandproviders.Inordertomakethe
dischargemedicationmanagement.This
shareddecisionmakingprocessonethattruly
ensuresthepatienthassymptom
supportspatientengagementanddrivesthe
managementandarapidfollowup
appropriateuseofproceduresandothercare,
appointmentwiththeircardiologistor
providerandpatientprocesseswillincludethe
primarycareprovidertoensurethatthe
following:
patientfullyunderstandsthesignsand
Acknowledgethatthereisadecisiontobe
symptomsthatrequiremedicalattention.
made;
Itisalsoimportanttodiscusstheoptionsof
Explainthattherearecareoptions,andeach
inoroutofnetworkpostacuteorfollowup
optionhasadifferentsetofissuesto
carewithpatientsandfamilycaregivers.In
consider;
theMedicareFFSprogram,thismayinvolve
Presentthebestevidenceabouttheprosand
discussionsrelatedtochoiceofpostacute
consofthecareoptions;and
providers,confirmingthatthepatientsstill
Acknowledgehowpersonalvaluesand
havefreedomofchoice.Thisisacritical
preferencesmightalignwiththecare
patientconversationbecauseapatientmay
options.
notwishtoseeaproviderthatiswithina
specifiedpaymentarrangement.

Followinganopportunityforthepatientand
familycaregivertomeetwithadecisioncoachor
anurseeducatortoreviewdecisiontoolsandget
answerstoanyquestions,theyshoulddetermine
togetherwithacareprovidertheoptimalpath
forward.

ChronicDiseaseManagementTools:Thegoal
ofconditionmanagementcareistwofold.
First,itistohelppatientsmakethekindof
lifestylechangesthatwillpreventaggravation
oftheirdiseaseortheneedforaprocedure.
Second,itistomanageapatientsmedication
protocol.Patientengagementiscriticalinbothareasandrequireswelldesignededucationalmaterials
andtoolssuchasinpersoncoaching,smartphoneappsfortrackingadherencetolifestylechange
activities,andpatientsupportgroupstoprovidebothemotionalsupportandtipsandtricksfromothers
whohaveexperiencedsimilarconcernstopatientsdiagnosedwithCAD.Whenavailable,highquality
decisionaidsshouldbeusedtomakecaremanagementdecisions.Astudytotracktheeffectsof
smartphoneappusagewasconductedbytheMayoClinicandfollowed44patientsparticipatingin
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cardiacrehabfollowingaheartattackandPCI.Patientsweredividedintotwogroups:onethatusedan
apptorecordtheirweightandbloodpressuredailyinasmartphone,andonethatdidnotusetheapp.
Theappgroupexperiencedgreaterimprovementsinthosecardiovascularriskfactors,andwasless
likelytobereadmittedtothehospitalwithin90daysofdischarge,comparedtothenonappgroup.The
appgroupalsoreceivededucationalactivitiesthatsupportedlifestylebehaviorchanges.Thegoalofthe
appandthestudywastobothdemonstratetheefficacyofcardiacrehabonpostAMIandPCIrecovery,
andtheimportanceofengagingpatientsinowningtheirlifestylebehaviorchanges(Klein,2014).
TransparencyofReimbursementandPaymentFlow:Patientsandfamilycaregiversneedtransparent
informationonhowprovidersarebeingreimbursedinanepisodepaymentmodel,theimpactthat
episodepaymentmayhaveonthepatientscostsharingorcopayresponsibilities,andthemannerin
whichcarewillbedelivered.
SMARTCarePilot:TheFloridaandWisconsinchaptersoftheAmericanCollegeofCardiologydeveloped
thispilotprojecttoimprovequalityofcare,enhanceaccesstocare,andreducehealthcarecostsby
providingtoolstohelpphysiciansandcardiovascularteammembersapplyguidelinesandappropriate
usecriteriaatthepointofcare.ThepilotinvolvesembeddingSMARTCaretoolsincludingpatient
educationandshareddecisionwithineverystepalongtheCADcarepathway.SMARTCareisalso
designedtoprovidepatientsandphysicianswithaccesstodataonclinicalqualitymeasures,outcomes,
andresourceutilization.AmongthetoolsincludedintheSMARTCareprogramarethePROMs(TONIC,
SAQ7,HeartQualityofLifeandDecisionQualityAssessmentInstrument.
Patientsshouldbeinvolvedwithallaspectsofidentifyingandachievingcaregoalsandshouldactively
participateintheircareplanning.Theyshouldalsobeencouragedtoengagetheirprimarycareprovider
intheirdecisionmakingprocess,especiallythosepatientswithchronicdisease.Integrationofhealth
informationtechnologythatfacilitatesaccesstohealthdata,sharedcareplans,educationalandsupport
tools,andcommunicationswithmembersofthecareteamcanimprovethetopicsdiscussedinallofthe
abovesections.OneexampleofatoolthatisprovidingaccesstothesedataisthesuccessfulOpen
Notesproject,whichisprovidingagrowingproportionofpatientstofullaccesstotheirelectronic
healthrecords(Belletal.,2015;Eschetal.,2016;Walker,Meltsner,&Delbanco,2015).HITisalso
crucialfortimelyfillingofprescriptions,makingnecessaryappointments,communicatingwithmembers
ofthecareteambetweenvisits,andcompletingpatientreportedmeasuresurveys.

6. AccountableEntity

Theaccountableentityshouldbechosenbasedonreadinessto
reengineerchangeinthewaycareisdeliveredtothepatientandtoacceptrisk.
Inthismodel,theaccountableentitywilllikelyrequireadegreeofshared
accountability,giventhenumberofcliniciansworkingtocareforapatient.

OverallReadiness:Thequestionofreadinesstobothreengineerthecaredeliverymodelforthe
patient,andintheprocess,acceptthefinancialrisktheymightincur,iscentraltothedeterminationof
whatentityorentitiesshouldbeaccountable.Thereareanumberofkeyrequirementsneededfor
successregardlessofwhichentity(orentities)areheldaccountable.Payersshouldworkwiththe
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accountableentitytoassesstheirreadiness,andpromotecollaborationtoallowformultipleproviders
withinaCADcareteamtosharetheriskandrewardinsuchamannerthatallareengagedincreatinga
seamless,efficient,patientcenteredcareprocess.Thisprocesscanrequireactiveparticipationacross
thecontinuumbyaligningincentivesacrosscontractsintheprivatesector,becausethepayeroftenhas
contractsdirectlywithproviders.MedicareallowsforfullfreedomofchoiceofproviderinFFS,andthe
riskspreadingmaytaketheformofagainsharingrelationshiponceaMedicarewaiverisinplace.Thisis
particularlyimportantinarelationshipwherebytheprovidersarestillpaidFFSwitharetrospective
reconciliation,becausetheaccountableentityhaslimitedabilitytoobtainbuyinfromotherproviders
intheepisodewithoutdirectincentivesforthemtocollaborate.
FactorstoWeighinDeterminingReadinessforEpisodeAccountability:

Minimumvolumestandards,inacuteandpostacutecare,fortheCADpatientpopulation;

Abilitytodeliver,orcontractfor,theentirebundleofservicestoberendered;

DemonstratedabilitytocareforCADpatients;

Effectivedischargeplanningcapacities,includingsystemstoincluderehabilitationphysiciansand
extendersearlyinthedischargeplanningprocesstohelpinidentifyingthepropertrajectoryof
patientsandtheircare;

Abilitytomanagetransitionsorhandoffsfromonesettingtoanotherwhennecessary(e.g.entry,
transitions,anddischarge);

Abilitytotrackqualityindicatorsandpatientoutcomesacrossanarrayofservicesandsettings;

Demonstrateddedicationofthehospital,physicians,nurses,therapists,andotherclinical
professionalstimetotheprograms;

Capacitytomonitorpatientclinicalstatusandcoordinatemedicationmanagement/reconciliationas
patientsprogressacrossacuteandpostacutecaresettings;

Abilitytocoordinatewithothercommunityservicestofosterthepatientsindependence;

Necessaryfinancialsystemstoadministerpaymentacrossmultipleentities;and

Abilitytotoleratefinancialrisk,includingpostdischargeoutcomes,suchasreadmissions,and
understanditsownriskexposure.

Therewillneedtobeaccountabilityplacedontheclinician(s)whooverseeboththecondition
managementandthePCIorCABGproceduresinsituationswhereeitherprocedureisneeded.Shared
accountabilityisanimportantdesignideatoconsider,especiallygiventheimportanceofateambased
approachtothismodel.Underthissharedaccountabilityumbrella,payerscannegotiatewithproviders
andusegainandlosssharingtoenableasysteminwhichallproviderswhotouchthepatientshare
somelevelofaccountability.Payerswillneedtoassesswhichprovider(s)inagivenmarketcanactmost
effectivelyinachievingaCADepisodepaymentinitiativesgoalsandestablishthatproviderorproviders
astheaccountableentity.
Insomeinstances,thecareteammaybenarrower,particularlyifoneclinicianorclinicianorganizationis
abletoprovideboththeconditionmanagementcareandconducttheprocedure.Thismaybethecase
ifthecardiologypracticealsoincludescardiacsurgeonsorifthepatientisseenwithinahealthsystem
thatintegratesbothhospitalandoutpatientservices.Amorecommonscenarioiswhenaprimarycare
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providerorcardiologistismanagingtheCADbeforetheneedforaprocedureisdeemednecessaryanda
separatepracticeisidentifiedtomanagethepatientsprocedure.
TheaccountableentitiesincurrentexamplesofCADepisodepaymentvary.Becausecurrentmodelsare
typicallyprocedurebased,itisoftenthehospitalthatservesastheaccountableentity.Sometimes,itis
thephysicianpractice(oftenthecardiologypractice).Inmanycases,theclinician,whenactingasthe
accountableentity,canhavethegreatestimpactoncareredesignbecauseestablishingaphysicianlevel
quarterbackcaneasetheepisodesmanagementprocess.Thecliniciancanleadthedesignand
implementationofnewpatientcareprotocols,andcommunicatewiththepatientspostdischarge
providermoreeasilythanthehospital.Further,discussionswithpatientsregardingappropriatenessand
expectationsonfunctionalimprovementsaremosteffectiveifthephysiciansarefullyengaged.
IntheAcuteCareEpisode(ACE)demonstrationthehospitalservedastheaccountableentity,whichis
consistentwiththeepisodedefinitionasitislimitedtohospitalandphysiciancaredeliveredinthe
hospitalforcertaincardiothoracicprocedures(CentersforMedicare&MedicaidServices,2016).The
rulesallowedthehospitaltoopttoshareaportionofgainsorlosseswithotherprovidersthatarepart
ofthedeliveryofcareforpatients,includingphysiciansorotherpostacuteproviders.Whilethehospital
wastheaccountableentity,itwasconsideredcriticaltogetthephysiciansinvolved.Thehospitalsinthat
initiativeutilizedgainsharingtoengagethephysicians.Theaccountableentityinthemorerecent
BundledPaymentforCareImprovementdemonstration,whichincludedcardiaccaresuchasCABG,PCI,
orAMI,couldbeaphysicianpractice,hospital,healthsystem,orasocalledconvenerthatwould
organizetheeffortacrossmultiplesites.Premier,whichisanorganizationthatworkswithhospitals,and
Cogent,whichmanageshospitalistpractices,aretwoexamplesofsuch.Itisnotsurprisingthatthe
accountableentitieswereoftenhospitalsinasmuchasthisbundledpaymentprogramwasalsocentered
uponproceduresdeliveredinthehospitalalbeitsomewhatbroaderinseveralmodels(Centersfor
Medicare&MedicaidServices,2016a).
AbilitytoAcceptRisk:Abilityandreadinesstoacceptriskarehighprioritiesamongthefactorsthat
shouldbeusedtodeterminetheaccountableentityorentities.Somephysicianpracticesmayhaveless
abilitytoassumedownsideriskthanlargerpracticesorotherbettercapitalizedproviders,suchas
hospitalsorhealthsystemsthatintegratehospitalandphysiciancare.Limitingthelevelofrisk
associatedwiththeepisodecanmitigatethislimitedabilityforphysicianpracticestotakeonrisk.
Recommendation7,PaymentFlowdiscussessomestrategiesfordoingthis.
Insituationswheresharedaccountabilityisnotfeasible,otherscenariosmightincludeonemulti
specialtygroupholdingaccountabilityforboththeconditionandtheprocedure,usinginternal
mechanismsforoperationalizingjointaccountability,oracardiologypracticeholdingaccountabilityfor
theentireconditionepisode,andaspartofthisaccountability,coordinatingwithasurgicalpracticeifa
procedureisdeemednecessary.Again,transparent,accessiblequalityinformationwillhelpthe
accountableentityseekoutthehighestperformingproceduralists.Thecommonalitiesofthesenotional
scenariosarethattheaccountableentityisincentivizedtoensurethecareintheprocedure(ifneeded)
isasefficientaspossible,thatthehandoffspreandpostprocedureareassmoothaspossibleforthe
patient,andthattheclinicianaccountableforthefullepisodeseekstocontractwiththehighest
performingproceduralists.
SeethechapteronOperationalConsiderationsforadiscussionontwo related issues:First,in thedata
infrastructuresectionisadiscussionofthestructuresnecessarytofacilitatecoordinationand
communicationacrossmembersofthecareteamandbetweencliniciansandpatients.Second,inthe
regulatoryenvironmentsection,isthediscussionofhowstatelawsmayaffecthowmuchriskproviders
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areallowedtoincur.Forexample,somestateslawsandregulationsaresupportiveofhospitalstoserve
astheaccountableentity,ratherthanaphysicianorphysicianpractice.

7. PaymentFlow

Theuniquecircumstancesoftheconditionlevel/nestedprocedure
episodemodelmakesupfrontFFSpaymenttoindividualproviders
withintheepisode,withretrospectivereconciliationandpotential
forsharedsavings/risk,themorefeasibleoption.

Episodepaymentsaretypicallydispersedviaeitherprospectivepaymentorretrospectivereconciliation
(Figure11).
InProspectivePayment,paymentisprovidedforthewholeepisode,includingallservicesand
providers,andpaidtotheaccountableentity,whichsubsequentlypayseachproviderinturn.This
paymenttypicallyoccursaftertheepisodehasoccurred,butistermedprospectivebecausetheprice
oftheepisodeissetinaprospectivebudgetaheadoftime.Thesavingsorlossesarenotsharedwiththe
payer;theyaresimplyafunctionofhowwelltheaccountableentityandtheproviderswithwhomit
coordinatesaremanagingthepredeterminedprice.
InRetrospectiveReconciliation,individualprovidersareeachpaidonatypicalFFSbasisandthenthe
targetepisodepriceandtheactualaverageepisodepricearereconciledafteraperiodoftimeacrossall
theepisodesattributedtoaprovider.Aninitialreconciliationistypicallyconductedbytheendofthe
firstquarterafteranepisodesend,andafinalreconciliationistypicallyconductedwithinsixmonthsof
theepisodescompletion.ForthisCADepisode,thesereconciliationstakeplaceinroughlyApriland
June.Basedonaspecificformula,eithernegotiatedordeterminedbythepayer,theaccountableentity
cansharewiththepayeringainsand/orlosses.Gainsorlossesarealsosharedamongprovidersinthe
episodetoencouragecollaborationandcoordinationacrosssettingsinsomeinstances.Thesetypesof
gainsharingarrangementsneedtobeconsideredwithintheconstraintsoffederallawsthatmayimpact
theirdesign,whichisdiscussedinfurtherdetailintheregulatoryinfrastructuresectionofChapter6,
OperationalConsiderations.

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Figure11:RetrospectiveReconciliationvs.ProspectivePayment

Whileprospectivepaymentisanoptioninsomecircumstances,suchaswhentheaccountableentityisa
healthsystemthatalreadyintegratestheclinicianandfacilitypayment,theWorkGrouprecommends
usingretrospectivereconciliationforthisepisodemodel.Retrospectivereconciliationissimplerto
administer,andrequiresfewerchangesfromcurrentpracticewheretheprevailingmodelisanopen,
nonintegratedsystem.Inaddition,retrospectivereconciliationismoreprevalentincurrentepisode
initiativesbecauseitdoesnotrequireproviderstodevelopthecapacitytopayclaims,itallowsfor
bettertrackingoftheresourcesusedintheepisode,anditcanbebuiltonanexistingpaymentsystem.
Retrospectivereconciliationmayalsocontinuetoengagethepayerasapartnerastheymaintainamore
directinterestinthefinancialsuccessoftheprogram.
Itmaybemoredifficulttoimplementasingleprospectivepaymentwhenmultipleprovidersinvolvedin
deliveringthecaredonotalreadyhavemechanismsforadministeringpaymentamongthemselves,
whichisthecaseinintegratedsystems.However,prospectivepaymentmayalsobebetterat
encouraginginnovationasprovidersinaprospectivepaymentprogramareoftennotlimitedbythe
payerscoveragepolicy.Increaseduseofprospectivepaymentcanacceleratedevelopmentofvarious
supportingmechanismstoaidinthisprocess.OnecautiononprospectivepaymentinaFFSMedicaid
programisthattheremayberegulatorybarriersforoneproviderassigningpaymenttoanother.Legal
counselshouldbesoughtinthisscenario.
AnadditionalconsiderationinthisCADepisodepaymentapproachiswhethertheaccountableentityis
thesameforboththeconditionandtheprocedure.Ifthepaymentflowisretrospectivereconciliationof
FFSpayments,andtheaccountableentitiesarebothexpectingtoshareingainsorlosses,themannerin
whichthosegainsorlossesaresplitwithinthetimeperiodoftheprocedureepisodeswillbeacritical
issue.

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8. EpisodePrice

Theepisodepriceshouldstrikeabalancebetweenproviderspecificand
multiprovider/regionalutilizationhistory.Thepriceshould

1) acknowledgeachievableefficienciesalreadygainedbypreviousinitiatives;
2) reflectalevelthatpotentialproviderparticipantsseeasfeasibletoattain;
and3)includethecostofservicesthathelpachievethegoalsofepisodepayment.

Pricingepisodesissignificantlycomplexasaresultoftheneedtobothassuretheaccuracyofestimates
anddevelopapricingstructurethatisfairtoprovidersbutencouragesinnovation.Thegoalshouldbeto
establishapricethatencouragescompetitionamongproviderstoachievethebestoutcomesatthe
lowestcost.Issuessuchasaccountingforvariationintheriskofthepopulation,havingalargeenough
patientpopulationtoallowforsufficientvariation,theimpactofdifferingfeeschedulesandnegotiating
power,shiftsininsurersmidstream,regionalvariationinavailabilityoftypesofproviders,andensuring
thatpaymentsaresufficienttoadequatelyreimburseforhighvalueserviceswillallneedtobetaken
intoconsideration.Forexample,Recommendation3,PatientPopulation,describestheimportanceof
usingamodelsuchastheHeartTeamtohelpmakeappropriatedeterminations.Incorporatingthis
model,whichisnotcurrentlyusedundertraditionalFFSreimbursement,willrequirecalculatingthe
reimbursementcoststodothiswork.
Itwillalsobenecessarytoidentifyapricethatbothreflectscurrentutilizationpracticesandcreatesan
achievablestretchgoal.Factorssuchasdecreasedratesofuseofcertaintesting,procedures,orlower
complicationandreadmissionratesmayaffecttheepisodepriceasaresultofthis.Inessencethisbakes
inacertainlevelofdownsiderisk,buttheproviderknowsupfrontthetargettheymustreach.However,
theepisodepriceshouldnotbesetsolowthatprovidersarediscouragedfromdeliveringallnecessary
care.
Themannerinwhichtheepisodepriceisestablishedlargelydeterminesthemonetaryrewardsor
penaltiesthatanaccountableentitymayexperience.Severalkeyaspectsinteractinthedetermination
oftheepisodeprice.Allpayerswillexpectsomereturnontheirinvestmentsinthispaymentdesignand
canchooseavarietyofmechanismstogeneratesomelevelofsavings.Itisalsoimportanttoconsider
includingcostsfortheservicesdescribedinRecommendation5,PatientEngagement,inthetarget
episodepriceinordertoprovidesufficientresourcesforcarecoordination,caretransitions,shared
decisionmaking,andotherstrategies.
BalancingRegionalandProviderSpecificData:Costdatashouldreflectamixofproviderandregional
claimsexperience.Thegoalofincludingregional,ratherthanmarketleveldata,istoensurethatthereis
enoughvariationinepisodecost.Thismixwillalsoensurethattheestablishedepisodepricetakesinto
considerationtheuniqueexperienceofthespecificprovider,andthatthegoalsaresetbasedonwhatis
feasibleintheregion.Riskadjustmentwillbeneededduringthisprocesstoadjustfortheunique
characteristicsofthepopulationtheproviderserves.Ifthepayerisanationalpayer,itmaybemore
difficulttoaddressspecificproviderissuesandwillrequireconsiderationoftheuseofnationalclaims
experiencetoensureequityacrossregions.Overtime,asperformancebecomeslessvariable,itmaybe
usefultolessentheproportionoftheepisodelookbackperiodthatisbasedontheorganizations
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specificexperience.Thepayercanalsoincludeanestimateofadecreaseincostsbasedon
improvementsinsomecases,suchaslowerrateofPCIorCABG,orreducedrateofhospital
readmissionspostAMI.TheWorkGrouprecommendsbalancingregional/multiprovider15andprovider
specificcostdata:
RegionalCosts:Usingregionlevelclaimsdataallowsthepayertotakeintoaccountthecostsofmultiple
providerswithinaregion.Thisemphasizesthefactthatoneproviderscostsmaynotberepresentative
oftheentireregion.Italsoaddressesthevariabilitythatmayexistforaproviderwithalowvolumeof
cases,aslongastheregionislargeenoughtoreflectsufficientvariability.Oneissuewithusingregional
claimsisthatifprovidersinthatregionasawholehavealreadyachievedacertainlevelofefficiency,
theymaybelessabletoachievefurthersavings.Theseregionsortheprovidersinthemcouldargue
thatanefficientregionwillbepunishedforitspreviousworktoachievetheseefficiencies.Onthe
otherhand,iftheregionhasahigherperbundlecostonaveragethanotherregionsorspecific
providerswithintheregion,thepayermayachievefewersavingsthaniftheepisodepricewassetata
nationalorproviderspecificlevel.Whilebasingsomepartofthepriceonregion,itisalsoimportantto
notevariationacrossregionsandtoconsiderwhethervariationacrosstheregionsiswarranted.Itis
importanttolookatthisclosely,andnotjustbakeinregionalvariationifthereisnotanobjective
reasonfordoingso.
ProviderCosts:Providerspecificcostsaretheactualcostsfortheproviderspreviouspatients.For
example,ifthecardiologypracticeistheaccountableentity,thepayerwillconducttheanalysisusing
thecurrentepisodedefinitionandapplyittoitsCADpatientsfromthepasttwoyears.However,this
cancomewithchallengesalthoughthesecostsmaybeaccurateforagivenclinicalpracticewitha
givenpayer,theymaybuildinalreadygainedefficienciesthatmakeitmoredifficulttoachievesavings,
orhavebuiltininefficienciesthatlimitthesavingsforthepayer.
Acombinationofproviderandregionalclaimsexperienceshouldbeusedasdata.Thismixwillensure
boththatthedeterminedepisodepricetakesintoconsiderationtheuniquehistoricalexperienceofthe
specificprovider,andthatgoalsaresetbasedonwhatisfeasibleintheregion.Thisprocesswillalso
requireriskadjustmenttoadjustfortheuniquecharacteristicsofthepopulationtheproviderserves.
Recommendation9,TypeandLevelofRisk,discussesthisfurther.
Establishinganappropriateepisodepriceforaconditionepisodewithanestedprocedureisfarmore
complexthanestablishingapriceforanepisodethatincludesonlyaconditionoraprocedure.For
example,aconditionbundleisintrinsicallycomplexbecauseitisdifficulttoestimatethenumberof
beneficiariesinthebundlewhowillneedprocedures.Moreover,thecostsofanysingleprocedurecan
besignificant.Addingaprocedureintoabundlerequirescreatingabudgetandaccountabilityforthe
procedure,aswellasanoverarchingbudgetforthecondition,includinganestimateofthenumberand
typeofproceduresthatmaybeneeded.Asdifficultasthissounds,thisepisodepricestructurecanset
upmeaningfulincentivesthatpreventtheoveruseofexpensiveprocedures,particularlywhenthereare
moreappropriatealternatives.
InordertodeveloptheCADepisodeprice,theWorkGrouprecommendsthathealthplansdefaulttoan
averagebasepriceforapplyingtheepisodetopatientswhoarenewtotheplanandforwhichno
historicaldataexists.DoingthiswouldlikelyleadtoanupfrontFFSpaymentandretrospective

15

Forpurposesofthispaper,regionisnotdefined.Theregionwillbedefinedasacombinationoftheexperience
ofmultipleproviders.Weusethetermregionaltoreflectthisassumption.
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reconciliationpaymentflow,sinceaplanmaywanttoconductretrospectiveadjustmentsafteracertain
numberofquartersbasedonpatientresourceuse.TheWorkGroupalsorecommendsthatpayerstrack
thefrequencyofdiagnostictestingoverthefirstquarteroftheepisodeinanewlydiagnosedpatientin
ordertounderstandandassesspricinginsubsequentyears.
Thepricefortheprocedureepisodecanbecalculatedasapercentageallocationcarvedoutfromthe
underlyingconditionepisodeprice.Itisreasonabletoassumethatanaccountableentitywill
automaticallybeoverbudgetinanyonecasewhereapatientrequiresaprocedureorexperiencesa
complication.However,theepisodepricewillaccountforacertainnumberofproceduresthatmay
occuracrossthepopulationasawhole.Onlythoseaccountableproviderswithhigherthanaverage
ratesofprocedures,adjustedforpatientseverity,willhavetotalaverageactualsthatexceedthe
budgets.Recommendation9,TypeandLevelofRisk,describesstrategiessuchasstoploss,whichwill
addresssituationsinwhichaproviderconductsagreaterthanexpectednumberofprocedures.While
thisoveragemaybeduetolackofhistoricaldataintheinitialyearsoftheepisodemodel,itwillbe
importanttoassesswhetheraproviderisconductingproceduresthatmaynotbeappropriateor
necessary.
Theprocedureepisodecouldbepricedwithhistoricaldataappliedtotheepisodedefinitionforthe
procedurethesamebasicfoundationasthecondition.ItwouldbenecessarytocalculatethePCIand
theCABGproceduresseparately.Determiningwhethertodooneortheotherwouldbeinthehandsof
theentityaccountablefortheoverallcondition.
Historicaldata,whereavailable,isessentialtodeterminingtheepisodeprice.Healthplansshould
ideallyuse12to24monthsofpatienthistoricaldata.Thedepthofhistoricaldatawilldifferdepending
onwhetherthemodelisbeingdesignedforMedicare,Medicaid,orforacommercialpayer.One
concernisthatthereisawiderrangeincostandutilizationwithinandacrossmarketsforcardiaccare
thanthereisinacommonprocedureepisode.Oneoptionforstartingtodevelopafullcondition
episodepricewiththenestedproceduresistobeginbypricingtheprocedureepisodes,andbuildingthe
conditionepisodearoundtheprocedure.Thisisparticularlyrelevanthere,sincehistoricaldataon
procedurepricemaybemostfeasibletocollectanduse.Theroleofnegotiatingpowerisalsoanissue.
Priceswillvarybasedonmarketshare.Whilenegotiatingpowerbasedonmarketshareisnothelpful,
CEPcanencouragetransparencyacrossprovidersandexposethesetypesofvariancestodrivemarket
tothosewhoareprovidingahighervalueproduct.
IncentivizeMoreEfficientLevelsofPractice:Inadditiontohistoricalproviderandregionleveldata,the
episodepriceshouldbebasedontheperformanceofthebetterperformersinaparticularmarket,such
thatallproviderscanseethattheepisodepriceandthequalitymetricperformancethresholdsare
feasibletoachieve.Ifaprovidersperformanceisalreadyatarelativelyefficientlevel,itwillneedtosee
somerewardforthatachievementatthesametimethatlowperformerswillhaveanincentiveto
improve.
Theepisodepricecanberevisedovertimetoensurecontinualimprovementbyboththemoreandless
efficientproviders.Inthisway,theepisodepriceautomaticallyintegratessavingsandsimultaneously
incentivizesacompressionofvariationincostandqualityacrossallproviders.Finally,theepisodeprice
shouldtakeintoaccountservicesthatarehistoricallyunderreimbursed,andthus,underused,butareof
highvaluetothepatient.Carecoordination,patientengagement,shareddecisionmaking,and
assessmentofpatientreportedpainandfunctionareexamplesofservicesthatcouldfallunderthis
category.
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OtherFactorsImpactingEpisodePrice
Therearemanyotherfactorsthatshouldbeusedindevelopingtheepisodeprice,thoughtheabilityto
dosowilldependontheavailabilityofdataandanalytictools.Theseinclude:
SocioEconomicStatusofthePatientPopulation:Thereareanumberofsocioeconomicfactorsthat
haveasignificantimpactonapatientshealthstatuspriortothejointreplacementprocedure,accessto
care,andpostprocedurerehabilitationandfollowupcare.Theseincludeincome,literacystatus,living
status(livingalone,livinginacommunitywithoutfamilyorothersupportsnearby),availabilityof
transportation(bothingeneral,andtocaresettings),andothers.Certainsocioeconomicfactorsmay
alignwithaspecificpayercategory,whetheritbeMedicareorcommercialpayers.
Publicvs.PrivatePayers:Therearedifferencesbetweenpublicandprivatepayersthatshouldbe
acknowledgedandreflectedintheepisodepricing.Inadditiontothesocioeconomicstatusofthe
patientpopulation,asdescribedabove,thereisalsoadifferenceinhowoverallpricingisset.Forprivate
commercialpayers,pricingisanelementofnegotiation;inthepublicpayerrealm,pricesaresetbythe
publicpayer.Eitherway,thiswillimpactthelevelatwhichtheepisodepriceisset,aswillthemarketin
whichthepayeroperates.Mostprivatesectorpayerswillneedtonegotiatewithprovidersonthe
episodeprice,particularlyifparticipationisvoluntary.Iftheinitiativerequiresparticipation,itmaybe
easiertoestablishanepisodeprice,asisthecasefortheCJR.
TrustedEmpiricalData:Onechallengeistheabilityforpayersandproviderstounderstandthevariation
inthecostsoftheepisodeacrosstheirregion.Determiningtheappropriatepricerequiresempiricaldata
fromatrustedsource.Theavailabilityofthesedatatoidentifytheopportunitiesforefficienciesis
criticaltothesuccessoftheseinitiatives.
EpisodePaymentFlow:Theepisodepricecanbesetretrospectivelyinanepisodemodelforwhich
retrospectivereconciliationistheselectedpaymentflow.Similarly,thepricecanbesetprospectivelyin
amodeldesignedaroundprospectivepayment.Thus,settingtheepisodepriceandthepaymentflow
shouldbepartofanintegratedprocess.
PatientandFamilyDefinitionsofValue:Informationonthetypesofservicesthataremostvaluedby
patientsandtheirfamiliesshouldbeconsideredindeterminingtheepisodeprice.Thisinformation
wouldnottypicallybecapturedviahistoricaldata,butratherviaengagementbetweenprovidersand
theirpatients,aswellasbetweenpurchasersandtheiremployees.
Forfurtherdiscussiononthistopic,pleasereadthepaperonFinancialBenchmarking,clickhere.

9. TypeandLevelofRisk

Thegoalshouldbetoutilizebothupsiderewardanddownsiderisk.Transition
periodsandriskmitigationstrategiesshouldbeusedtoencourage
broadproviderparticipationandsupportasbroadapatientpopulationaspossible.

Thegoalshouldbetoincorporatebothupsiderewardanddownsideriskwhensettinganepisodeprice.
Withoutdownsideriskwheretheactualcostsexceedthetargetepisodepricetheaccountableentity
andotherinvolvedprovidershavelessincentivetoredesigncaretocreateefficienciesandimprove
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patientcare.Further,increasesinthecostofcare
deliveryfromyeartoyearoftennegatethebenefitsof
upsidesharingofsavingsduetotherelianceon
historicaldata.Prospectivepaymentincludesbothby
definition.RetrospectivereconciliationwithupfrontFFS
paymentcanbedesignedeithertoonlyshareinsavings
(upsidereward)ortoshareinlosses(downsiderisk).In
somecases,payerswillbeginwithupsiderewardto
allowfortheprovidertoestablishtheinfrastructureand
reengineercarepracticesinordertobecomecapableof
managingdownsideriskinthefuture.
Payerscanutilizestrategiestolimitthatriskorto
transition(phasein)todownsideriskarrangementsover
timeinordertoaddressconcernsrelatedtothelevelof
risk.Thisisparticularlyimportantiftheinitiativeis
voluntaryandparticipationwouldbelimitedwithoutthe
optionforonlyupsidereward.Decisionsabouttype,
level,andtimingofupsideanddownsideriskillustrate
thetensionsbetweenpayersandproviders:more
attractiveriskarrangementsforpayersmaybeless
attractiveforproviders,andviceversa.Consequently,in
theprivatemarket,thesefactorsbecomepartofthe
ongoingnegotiationsamongnetworkparticipantsand
payers.

SafetyNetProvidersandRisk
Aprimarygoalindesigningany
alternativepaymentmodel
arrangementisguardingagainst
unintendedconsequences.Inepisode
paymentforcoronaryarterydisease,
theunintendedconsequencethat
concernsallprovidersbutperhaps
safetynetprovidersmostofallisthe
potentialfordecreasedaccesstocare
forpatientswithpoorhealthstatus,
whichputsthematincreasedriskfor
pooroutcomes.Thismaybecorrelated
withlowersocioeconomicstatusifthe
providerfeelsthatitwillnotbe
possibletoprovidethefullcontinuum
ofcareandachievepositiveoutcomes
withintheepisodeprice.Safetynet
providersinparticularmayneedtime
todevelopadequatereportingand
staffinginfrastructure;andbuild
relationshipsacrosshistoricallysiloed
organizationsinordertofeelprepared
totakeontheriskinanepisode
paymentmodel.

MechanismsforLimitingRisk:Thelevelatwhichthose
risklimitsaresetisacriticaldesignelement.Therearea
numberofquestionstoconsiderincluding:1)willthe
accountableentityberequiredtopaythefulldifferencebetweenthetotaldollarsovertheestablished
episodepriceandtheactualepisodecostsbacktothepayer,orwilllimitsbeestablished?and2)whatis
theoptimalpatientpanelsizeforenablingtheadequatespreadofriskintheeventthatthenumberof
proceduresprovidedoverthecourseoftheepisodeisgreaterthanexpected?Limitsareespecially
importantwhenthefactthatanaccountableentityisaccountableforcareprovidedbyotherproviders
istakenintoaccount.Inthecaseofcardiaccare,whoaccountsforthelargestpercentageofoverall
costs?TheFFSpaymentreceivedbytheaccountableentitythephysicianpracticeislimited
comparedtotheliabilityassociatedwiththeentirecostoftheepisodeovertheestimatesfortheentire
population.
Oneriskmitigationstrategyalreadyaddressedislimitinghighriskcasesthroughexclusions.Following
areadditionalstrategiesusedbyvariousinitiativestolimitriskinanepisodepaymentwhilestill
maintainingasbroadanepisodepopulationasisfeasible.Theseareoften,butnotalways,usedin
tandem.
RiskAdjustment:RiskadjustingtheepisodepricebasedonthepatientseveritywithintheCAD
populationisoneriskmitigationstrategy.Mostinitiativeswillbothincludealistofincludedand
excludedpatientsandhavealistoffactorsthatwouldbeusedtoadjusttheepisodeprice.Therearea
varietyofapproachestocapturingpatientcharacteristics,riskfactors,andotherparametersthat
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predictCADresourceuseandexpenditures.Forexample,theHealthCareIncentivesImprovement
Institutesevidencebasedcaseratescreateavarietyofpatientspecificepisodesthatrecalibratebased
onvariouspatientspecificseverityfactors(HealthCareIncentivesImprovementInstitute,2016).
AnotherexampleistheSocietyforThoracicSurgeons(STS)NationalDatabase,whichincludesmore
than5.4millionpatientrecords.ThedatabasecontributestotheSTSRiskCalculator,whichallowsusers
tocalculateoutcomessuchasapatientsriskofmortalityandlengthofstay.Whileriskadjustment
methodsarelimitedintheirpredictiveaccuracybasedonclaimsalone,overtime,thesefactorsand
theirweightscanbeupdatedtobecomemoreaccuratebasedonempiricalexperience.However,risk
adjustmentcanpotentiallyleadtogaming.Thiswillneedtobemonitoredtoensurethatcodesarenot
beingoverusedtoobtainhigherpaymentsratherthantoaccuratelyreflecttheconditionorriskofthe
patient.Forfurtherdiscussiononthis topic,please readthepaperonFinancialBenchmarking,click
here.
StopLossCaps,RiskCorridors, and Capital Requirements: Stoplosscapsarealreadydiscussedinthe
contextoftheincludedpopulationasonewayto limittheriskofveryhighcostpatientsatanindividual
patientlevel.Stoplosscapscanalsobeusedonanaggregate levelacrossthe population.Riskcorridors
limittheexposureoftheaccountableentityby establishinganupperlimitoverwhichthe accountable
entitywillnothavetopaybackanyamountofdollarsthat theoverallcostsoftheepisodesmayexceed
theestablishedepisodeprice.Thesecorridorscanalso beplacedontheupsidereward,sothatthe
incentivestolimitcarearelessthantheywouldotherwisebe.Anotherriskmitigationstrategyisto
requiretheaccountableentityto maintainacertainlevelofcapitalinorder tocoverlosses.Whilethese
typesofarrangementsareoftenusedtolimitinsurancerisk, thesameconceptscanalsobeusedinthis
contexttolimitservicerisk.

10. QualityMetrics

Prioritizeuseofmetricsthatcapturethegoalsoftheepisodeatboth
theconditionandtheprocedurelevels.Theseincludeoutcomemetrics,
patientreportedoutcomeandfunctionalstatusmeasures,andsome
processmeasuresrelatedtotheprocedures;usequalityscorecardstotrackperformance
onqualityandinformdecisionsrelatedpayment;and

usequalityinformationandothersupportstocommunicatewith,andengagepatients
andotherstakeholders.

Therearetwotiersofmeasurementnecessaryinthismodelmeasuresthatprovideinformationonthe
qualityofconditionmanagement,andmeasuresthatholdprovidersaccountableforthequalityand
outcomesspecifictoaCADprocedure.BothCMSandcommercialhealthplansuseexistingcardiaccare
measuresofclinicaloutcomesandclinicalprocessesthataddressbothconditionalmanagementcareas
wellasprocedurerelatedcare.Thereshouldbelessfocus,however,onprocessofcaremeasuresand,
instead,agreaterfocusontheuseofepisodelevelmeasuresthatallowforassessmentofpatient
outcomesacrosscaresettingsandproviders.Thatsaid,itismosteffectiveifallstakeholdersinthe
initiative,includingproviders,agreeonthevalueofthemeasures.

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GiventhelackofsystemleveloutcomemeasuresforCADcare,theWorkGrouprecommendsusing
PatientReportedOutcomeMeasures(PROMs)tocollectinformationonpatientsexperienceofcare
fromtheircardiologist/PCP,fromtheirsurgeoninthecaseofprocedures,andfrommeasuresof
functionalstatuspreandpostprocedure,andovertimewithacondition.
Itisimportanttorecognizethepreferenceforalignmentofmeasuresacrossprograms,useofnationally
endorsedmeasures,andalimited,tightsetofmeasureswithalowburdenofcollectionwhenselecting
themetricsforanepisodepaymentmodel.TheWorkGroupsupportstheseprincipleswheneverthey
canbemetwithmeasuresthatincentpriorityopportunitiesforimprovingCADcare.Ameasurethat
meetsthesecriteriawithoutthepotentialforclearbenefitsamongCADpatientsisnotrecommended
becauseitwouldnotbefitforthispurpose.TheWorkGroupisnotincludingrecommendationsfor
specificmetricsatthistime.
PotentialMeasures:Table10describesexamplesofpotentialmeasures,mostofwhichareincludedin
theCoreQualityMeasuresCollaborative(CQMC)ConsensusCoreSetofCardiovascularMeasures
Version1.0(CentersforMedicare&MedicaidServices,2016b).TheCQMCdividesthesetintochronic
careandacutecareaccountabilityandspecifieswhetherthemeasuresthemselvesareatthehospitalor
thephysicianlevel.TheWorkGrouprecommendsconsideringthemeasuresinTable10asamenuof
potentialoptionsfordevelopingacoremeasuresetforCADepisodepayment.
Table10:PotentialCADRelatedQualityMeasuresforUseforAccountabilityand/orPayment
Measure

Examples

Clinical
Outcomes

Hospital30dayriskstandardizedreadmissionratefollowingCABG(NQF#
2558)

Hospital30dayunplannedriskstandardizedreadmissionratefollowingCABG
(NQF#2515)

Hospital30dayriskstandardizedreadmissionratefollowingAMI(NQF#0505)

Hospital30dayriskstandardizedreadmissionratefollowingPCI(NQF#X)

30dayriskstandardizedmortalityratefollowingPCIforpatientswithSTEMI
(NAF#0536)orwithoutSTEMI(NQF#0535)

RiskadjustedoperativemortalityforCABG(NQF#0119)

PrimaryPCIreceivedwithin90ofhospitalarrival(NQF#0163)

InhospitalRiskAdjustedRateofBleedingEventsforPatientsUndergoingPCI
(NQF#2459)

PotentiallyAvoidableComplicationsMeasures

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Measure

Examples

Clinical
Processes

ChronicStableCAD:ACEinhibitororARBtherapy(NQF#0066)

ChronicStableCAD:Antiplatelettherapy(NQF#0067)orbetablockertherapy
(NQF#0070)

TobaccoUse:ScreeningandCessationIntervention(NQF#0028)

Therapywithaspirin,P2Y12inhibitorandstatinatdischargefollowingPCI
(NQF#0964)

Postdischargeappointmentforheartfailurepatients(NQF#2439)

CAHPSClinicianandGroupSurvey

CAHPSSurgicalCareSurvey

Gainsinpatientactivationscoresfrom612months(PatientActivation
Measure)(NQF#2483)

Appropriate
Use

CardiacStressImagingNotMeetingAppropriateUseCriteria:Routinetesting
afterPCI(NQF#0671)

Functional
Status

SeattleAnginaQuestionnaire

TheContinuityAssessmentRecordandEvaluation(CARE)tool(measures
healthandfunctionalstatusuponhospitaldischarge,changesinseverity,and
otheroutcomes)

Mentalhealthstatusfollowingcardiovascularevents

Symptommanagementmeasures

Measuresofuseofcardiacrehabilitation

FollowupvisitafterhospitalizationbyPCP

CareTransition
Coordination
Patient
Reported
Outcomes

Measure
Conceptsfor
Development

Thegoalofepisodepaymentistoachieveimprovedoutcomesforpatient.Asaresult,itisimperative
fortheCADepisodemodeltoincludeclinicaloutcomemeasuresforthepurposeofaccountabilityandin
ordertotrackwhetherthecaredeliveredisorisnotachievingthegoal.However,unliketheLAN
recommendationsonepisodepaymentformaternitycareandelectivejointreplacement,theWork
GroupdoesrecommendtheinclusionofsomeclinicalprocessmeasuresforCAD,duetothelinkthat
certainprocessmeasureshavetopatientoutcomes,and/ortheircorrelationtomeaningfulcare
transitionefforts.
QualityScorecard:Incorporatingperformanceonmetricsintoscorecardsforensuringhighqualitycare
delivery,informingthedecisionsofthepatient,familycaregivers,andproviders,andusingthe
scorecardtodeterminepaymentlevelsarecorefeaturesofanyepisodepaymentinitiative.This
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informationwillbecriticalforengagingpatientsindecisionsrelatedtochoiceofproviderandsetting
andtypesofcaredelivery.Below,wedescribeinmoredetailthepotentialmeasuresthatcouldbeused
andthemannertheywouldbeused,bothinascorecardandforinformationpurposesforpatientsand
otherstakeholders.
Mostepisodepaymentinitiativesuseaqualityscorecardwithdefinedthresholdsthataprovidermust
meetorexceedinordertoreceiveeitherthefullreimbursementforanepisodeorthefullshared
savings.However,thedecisiononwherethosethresholdsaresetorhowtheyareusedshouldbeleftto
thepayerandprovidertonegotiate.Someinitiativesvarythelevelofsharedsavingsbasedon
performancemetrics,whileothersalsouseminimumperformancelevelsasathresholdforreceiving
anyportionofthesavings.Inaprospectivelypaidinitiative,itmaybeusefultowithholdsomeportionof
theprospectivepaymentandbaseitspaymentorlevelofpaymentonthereportingofandperformance
onthequalityscorecard.
Arichsourceofmeasuredatafordevelopingaqualityscorecardexistswithincardiaccarerelated
registries,suchastheSocietyofThoracicSurgeons(STS)NationalDatabase.TheSTSregistrywas
establishedin1989asaninitiativeofcardiothoracicsurgeonsseekingtoimprovethesafetyand
outcomesofcare.Theregistryaffordscardiothoracicsurgeonsacrossthenationastandardizedformat
forcollectingasetofdataelementsrequiredtosystematicallymeasureandcomparesurgicaloutcomes.
Thesystememploysrobustriskadjustmentandbenchmarksthatbothenablecomparisonacross
providersandovertime,andthatformthebasisforsharingbestpracticesandmotivatingcontinuous
qualityimprovement.Moreover,since2010,theSTShasfacilitatedthepublicreportingofresultsof
surgicalqualityandoutcomesforproceduressuchasCABGandaorticvalvereplacement(AVR),among
others.TheworkoftheSTSandotherswithintheNationalQualityRegistryNetwork(NQRN)couldbea
majorcontributiontothepotentialforincorporatingclinicallyrichoutcomemeasuresforpriority
conditionsandproceduresintoCEPmodels.
QualityInformationtoCommunicateandEngagewithPatients:Inadditiontousinginformationon
qualitytodeterminepayment,itisimportanttomanystakeholderstohaveaccesstodataonquality.As
discussedunderRecommendation5,PatientEngagement,patientsneedqualitydataonthe
performanceofdifferentprovidersprimarycare,cardiology,surgeons,andintensiviststoinform
theirchoices.Patientsalsoneedinformationaboutthedifferentfacilitiesinwhichtheirproceduresmay
takeplace.
Oneexampleofpublicreportingofcardiacsurgeryperformanceatboththehospitalandthesurgeon
levelistheSTSPublicReportingInitiative.ThoughtheSTSinitialeffortsfocusedonCABGperformance,
ithasalsoaddedqualitydataonAorticValveReplacement(AVR)surgery.TheSTSusesacomposite
CABGscorethatincludes11differentcomponentsofclinicalcare,whichincludebothmortalityand
morbidityratesandadherencetoNQFendorsedqualitymeasures.Itsstarratingsystemisdesignedto
allowpatientstoviewaprovidersperformanceagainsttheaverageperformanceofallSTSdatabase
participants.
Employers,purchasers,andpayersalsoneedthesedatabothtodevelopprovidernetworksandtohelp
employeesmakethesechoices.Employeesneedtounderstandthebundleandwhattheirroleisin
providinghighqualitycare.
Finally,episodepaymentdesignmustbuildinthecapacitytocollect,analyze,andprovidedata;andto
supportCADpatientsandconsumersinidentifyingandinterpretingthisinformation.Theuseofpatient
navigatorsforwhomsomeexistinginitiativeshavesubstitutedcommunityhealthworkerscanbe
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helpfulinprovidingthissupport.First,however,theinformationitselfmustbeavailable.Itisimportant,
therefore,toestablishcrosscuttingeffortstodefinemetricsandsystemsfordatacollectionand
analysis.Itisasignificantburden,however,foreachinitiativetodefineitsownmetrics,collection
system,andscorecard.Broadereffortsareneededtobuildthenecessaryinfrastructureformeaningful
developmentanduseofqualityperformanceinformation,andbuildingthesesystemsisoneofthekey
challengesdiscussedinChapter6,OperationalConsiderations.ToreadtheLANWhite Paperon
PerformanceMeasurement,clickhere.

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Insertcoverpage

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Chapter6:OperationalConsiderations
Inthissection,theCEPWorkGroupdoesnotofferspecificrecommendations.Instead,theWorkGroup
hasdevelopedasetofquestionsthatalladoptersofclinicalepisodepaymentshouldconsiderand
discusswhentheybeginplanninganddesigningepisodepaymentmodels.
Whilethedesignofanepisodeofcareiscriticaltoitssuccess,someaspectsofthewayepisode
paymentsareconductedaffectthelikelihoodthatpayersandproviderswillbeabletoadoptagiven
model.Theseoperationalconsiderationsinclude:remainingmindfuloftheperspectivesofstakeholders;
buildingandmaintaininganappropriateinfrastructurefordatacollection,analysis,andpayment;
stayingabreastofregulatorystatutesandregulationsthatcouldaffectthedesignandoperationof
episodepayments;and,finally,consideringhowepisodepaymentsinteractwithpopulationbased
payments(Figure12).
Figure12:OperationalConsiderations

1. RoleandPerspectivesofStakeholders

Howdotheperspectivesofstakeholdersimpact
thedesignandoperationofclinicalepisodepayment?

Itisimportanttounderstandthevariedperspectivesofthosewhowillbeimpactedbytheclinical
episodepayment.Eachstakeholder,whetherpayer,provider,consumer,orpurchaser,hasunique
expectations,goals,andlimitationsduringthedesignofanepisodepayment.Becauseofthemultiplicity
ofthesediverseperspectives,itisimportanttoconsiderallstakeholdervoicesinthedesignand
operationofepisodepayments.

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Manystakeholdershavemultipleand
sometimesconflictingviewpoints.For
example,commercialhealthplansandlarge
payers(includingstatesandthefederal
government),maybeinterestedincreating
incentivesforproviderstodevelopthe
capacitytoinvestindatainfrastructureto
supportthatgoal.Meanwhile,providers
maybeequallyinterestedinthepotentialof
episodepaymentsandcanbevaluable
innovators.Buttheymayhavereservations
aboutleadershipandaccountabilitywhenit
comestocarecoordinationacrossmultiple
medicalsettings.Involvingpatientsand
familiesinmyriadwaysthroughoutthe
episodeaspartnersintheirowncareandin
thedesign,implementationandevaluation
ofepisodepaymentmodelsisanessential
strategyforadvancingvaluebasedcareand
improvingoutcomes.Theycanalsoprovide
valuablefeedbackonhowthemethodology
impactsthepatient.
Finally,becauseoftheirpurchasingpower,
employersandotherentitiesthatpurchase
healthcarecanalignincentivesbetween
themselvesandprovidersthroughepisode
payment.Purchasersinterestscoincide
withthoseofconsumersandpatients,
becausebothgroupsshareavestedinterest
inensuringthatepisodepaymentmodelstie
reimbursementtoperformance.

StakeholderPerspectives
PatientsandConsumers:Patientsandtheirfamilies,caregivers,
andconsumerscontributeto,andbenefitfrom,episode
paymentmodels,includingbyparticipatingindesign,
governance,evaluation,andimprovementofepisodepayment
models.Theycanusehighqualitydecisiontoolstodecideabout
appropriatecare.Whenpatientsandcaregivershaveaccessto
meaningfulqualityandcostinformation,theyareabletomake
thoughtfulcarearrangementsthatfavorthehighestvaluecare
andproviders.Patientsandfamiliescanparticipateinshared
careplanningandbenefitfromcarecoordinationtoimplement
careplansandmonitorquality.Finally,consumersandpatients
canprovideimportantfeedbackoncareexperiencesand
outcomes,whichhelpsmeasuresuccessanddriveimprovement.
Healthinformationtechnologyfacilitatestheirinvolvement
throughouttheepisode.
Payers:Payers(commercialhealthplans,Medicare,and
Medicaid)seektocreateincentivesforproviderstocoordinate
careacrossprovidertypesandthus,createefficienciesthat
decreasecostsforabundleofservices.Theyareoftenwillingto
investinstrongdatainfrastructureforepisodepayment
implementation,aswellasdevelopnewcontractingprocedures
withparticipatingproviders.
Providers:Providers(cliniciansandfacilities)lookforindicators
ofsufficientleadershipandaccountabilityforepisodepayment
tobeestablishedtoensurethatthegoalsofcareredesignand
carecoordinationacrosssettingsandprovidersareprioritized
overcostsavings.Theyareinterestedinaligningfinancial
incentives,datarequirements,andqualitymeasurement
requirementsacrossallpayerswithwhichtheycontract.
EmployersandPurchasers:Purchaserscanadvancethegoalof
aligningincentivesbetweenthemselvesandprovidersthrough
episodepayment.Purchasersmayalsobeinterestedin
integratingtierednetworkswithinabundledpaymentmodelto
provideincentivestoemployeestoseekcarefromhigh
performingprovidersandinimprovingvaluethroughenhanced
benefits.Largepurchasersholdsignificantleveragewithpayers
andprovidersandcanpushforepisodepaymentwithintheir
contractingnegotiations.Inthecaseofmaternitycare,this
leverageisheldbyemployersandstateMedicaidagenciesthat
canencouragetheirmanagedcareorganizations(MCOs)touse
bundledpaymentformaternitycare.IntheCADepisodemodel,
purchasersmayneedtodevelopdifferenttoolsfornegotiating
multiyearcontractswithpayers,giventhefluctuationincare
needsforpatientswithCADfromthepointofdiagnosistoactive
managementandbeyond.

Welldesignedpaymentmodelsconsiderall
oftheperspectivesabove,aswellas
supportreliabledeliveryofcarethatis
providedattherighttimeintheright
setting.Anotherconsiderationthatimpacts
therolesandrelationshipsamongthe
variousstakeholdersiswhetherthe
initiativeisvoluntaryormandatory.For
example,ifagivenmarketischaracterized
byhavingsignificantalignmentofmultiple
payersorhasonedominantpayer,thereis
greateropportunityforapayertomake
participationmandatory.Whetheritisvoluntaryormandatory,thenegotiationsamongproviders,
purchasers,andpayerswillneedtoensurethatparticipationisfeasibleforthosetowhomitapplies.

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2. DataInfrastructureIssues

Whatdatasystemsdopayers,providers,andconsumersneedto
successfullyoperationalizeepisodepayment?

Oneofthebiggestchallengestoimplementingaclinicalepisodepaymentmodelistheprocessof
managingandsharingthevastamountsofdatanecessarytoassess,manage,andmitigateriskandto
useittoimprovequalityandoutcomesforpatients.Effectivedatainfrastructuresystemsmustbeable
toachievetwothings:

Groupclaimsintoepisodesforanalysisandpayment;and

Meetprovidersneedforcriticalpatientinformationtobeaccessibleacrossprovidersandto
patientstocoordinatecareandengagepatientsintheircare.

Atpresent,thefieldlacksscalableinfrastructureforwidespread,effective,efficientadoptionofepisode
basedpayment.PayersystemsaresetupforFFSpayment,or,insomecases,fullcapitation.The
intermediatestepsofbundledpaymentrequirepullingclaimsfrommultipledatafiles,applying
exclusionaryrules,calculatingandupdatingbenchmarksandtargetepisodeprices,anddoingsowithin
thecontextofmultipleprovidercontractsandenrolleebenefitdesigns.Simplyput,somepayersare
strugglingtodevelopthebusinesscaseandjustifythereturnoninvestmentforbuildingthesesystems.
Forepisodepaymenttoachieveitspotentialrequiresadatainfrastructurethatsupportsandfacilitates
analysisforthefollowingpurposes:

Determiningwhichclinicalepisodes/conditionstotargetandwhatservicesandcostsareconsidered
partoftheepisode;

Establishingtheepisodeprice;

Bundlingclaimstodeterminehistorical/actualexpenditures;and

Communicatingclinical,patientgenerated,andcarecoordinationdataacrossproviders,including
primaryandspecialtyphysicians,hospitals,postacutecaresettings,andotherswhoarepartofthe
patientscareteams.

Thisdatainfrastructuremustalsosupporttheabilityofclinicianstounderstandpatientpreferencesand
expectations,andforpatientsandfamilycaregiverstocommunicatepreferencesandgoals.Forthese
purposes,anepisodepaymentdatasystembyitselfmaynotbesufficient.Otherclinicaldataand
patientdecisionaidinformationwillalsobeimportant.However,thepaymentsystemsthatanalyzeFFS
claimsdatacanalsoprovideimportantinformationonthetypesofclinicaldecisionsandtheimpactof
thosedecisionsonpatientsexperiencingsimilarconditions.
Inaddition,whetherclinicalepisodepaymentisprospectiveorutilizesretrospectivereconciliationwith
upfrontFFSpayment,itiscriticaltobuildandimplementsoftwareandsystemstogrouptheseclaimsto
estimateandestablishtheepisodeprice,tocalculateactualcosts,andtomakethecorrectpayment
adjustments.Currently,thedataanalysisandsystemsbeingusedaretoomanual,andtheexpenseof
eitherreplacingorbuildingthistypeofprocessontopoflegacysystemswilllimitbroader
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implementationofepisodepayment.Dependingonthevolumeofpaymentthatisdoneinthismanner
andthemonetaryimpact,revisinglegacysystemstobeabletohandlethislevelofcomplexitymaynot
beahighpriorityforapayer.Payersarefacedwithabuyorbuildscenariowherebytheycaneither
buythecomplexinfrastructure,albeitwithlittleknowledgeaboutthequalityoftheproduct,ortryto
builditthemselves,withtheunderstandingthatitwillbealongterminvestmentinthistypeof
paymentreform.Althoughtheneedsarecomplex,somecompanieshavedevelopedthecapacityto
assistpayersandprovidersinthesefunctions.Furthermovementtowardtheuseofclinicalepisode
paymentswillcreateanevengreatermarketforsuchserviceswhethertheyaredevelopedbyathird
partyorwhetherthepayercreatestheirownsolution.
Moreover,thesesystemsmustbeabletosupportdatasharingwithprovidersandpayersina
transparentmannertoensurethatallinvolvedunderstandwheretheopportunitiesforefficienciesand
improvementsincareoccuracrosstheepisode,includingpotentiallyindividualpatientmanagement.
However,itisoftenverydifficulttoobtainusefuldatainasufficientlytimelymannertoallowforthe
mosteffectivecaremanagementofthepatient.Anotherissueisthecapacityforproviderentities,and
insomecases,payers,toanalyzethedata.Eveniftheunderlyingclaimsareavailableandthelogicfor
runningthedatawasshared,providerentitiesoftenfinditchallengingtorunthenecessaryreports.
Finally,forthecaretobeaseffectiveaspossible,digitalsystemsthatprovideinformationtopatients
andenablethemtocommunicatewiththeirprovidersandtakeanactiveroleintheircarearealsokey
andmustbetiedtotheproviderdataanalytics.Thegroupingofclaimsisprimarilyapayerfunction;
however,theclinicalinfrastructureissomethingthataprovidermaywant/needtodeveloponitsown,
oritispossiblethatapayercanassist.ThisisacriticaldecisionpointwhenimplementingCEP.
TheWorkGrouprecommendsthefollowingtwoconceptsforoperationalizingthedatainfrastructure
neededtoimplementepisodepayment.
AServiceorUtilityModel:Inthismodel,agroupofpayerspayathirdpartytodevelopacoresetof
logicthatcouldbeusedtogroupclaims;providefeedbackandbenchmarkingtoproviders;andsupport
datasharingforpatientmanagement,insteadofeachpayerhavingtodevelopthecapacityindividually.
SeveralexampleswereprovidedbyWorkGroupmembersincludingvendorsthatareperformingthis
capacity;largepayers,suchasMedicaidinonestate;andregionalinitiativeswherebypurchasersor
payerssupportathirdpartytoperformthesetasksinauniformmanner.StatesponsoredAllPayer
ClaimsDatabases(APCDs)areanexampleofadatawarehousethatcouldpulltogetherdataacross
payersforthesepurposes.Inanyimplementationscenario,neutralsourcesofsuchdataandanalysis
willhelptofacilitatemultipayeranalysis.Thisensuresthatprovidersinvolvedinthisformofpayment
arenotsubjecttomultipledefinitionsofepisodesandbenchmarkingformulas.Anotherconceptthat
wasimportanttotheWorkGrouptoensurehighqualityproductswastopotentiallycreatea
certificationprocessforthistypeoffunction.
ACoreSetofLogic:Acoresetoflogicwillassistthehealthcareindustryindevelopingthecapacityfor
groupingclaimsintobundlesbystandardizingthecorelogic,butallowingeachpayertocustomizea
portionofthemoregranularrules.Thiscouldbeappliedindividuallybypayersorwithinthecontextofa
thirdpartydescribedabove.

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3. RegulatoryEnvironment

Howcanthecurrentandevolvingfederalandstatelegallandscape
inthehealthcareindustryaffectepisodepaymentimplementation?

Anyorganizationpursuinganepisodepaymentinitiativeneedstoremaincognizantofthestatutoryand
regulatoryframeworkthatmayimpactthemannerinwhichitcreatesrelationshipswithprovidersand
thewayincentiveandriskstructuresareestablished.
Themannerinwhichclinicalepisodepaymentisdesignedandimplementedwillbeaffectedbyexisting
andemerginglawsandregulationsatboththefederalandstatelevels.Certainarrangementsand
relationshipsbetweenprovidersandsuppliers,aswellasbetweenpatientsandprovidersandsuppliers,
mayimplicatefederallawsandregulationsdesignedtopreventinappropriateincentivesandtoprotect
beneficiaries.Further,manystateshavecreated,orareconsideringcreating,regulationsdesignedto
ensurethatprovidersdonottakeonalevelofriskthattheymightnotbeabletosupportwithout
harmingthepatientorotherconsumers(regardlessofwhetheritischaracterizedasinsuranceor
servicerisk).
Threefederallawsofsignificantimportancetohealthcaresystemsarethephysicianselfreferrallaw,
theantikickbackstatute,andthecivilmonetarypenalty(CMP)laws.Itwillbeimportantforprovider
organizationstodiscusswithlegalcounselthepotentialimplicationsoftheseandotherlawson
proposedarrangementsforclinicalepisodepayment.HHSissuedlimitedwaiversoftheselawsfor
specifictypesofmodels,includingtheBundledPaymentforCare Improvement(BPCI)initiativeandthe
CJR.MorediscussioncanbefoundontheCMS Fraud andAbuseWaiverswebpage(Centersfor
Medicare&MedicaidServices,2016c).
Severalotherlegalissuesalsoimpacttheimplementationofclinicalepisodepayment.Forexample,
EMTALAisanimportantconsiderationwhenpricingthethreeepisodesofcarediscussedinthispaper.
Patientsbeingseenforthefirsttimeintheemergencyroomwillbegivenwhatevercarethehospital
andclinicianoncalldeterminefeasiblewithoutregardorawarenessoftheclinicalepisodepayment
context.Thismaybeparticularlyimportantformaternityepisodesifthebundledpaymentisdeveloped
usingthecostofabirthcenterbirth.
Regardingmedicalliability,itmaybethecasethatcliniciansandfacilitiesneedtoconsiderconcerns
relatedtoliabilitywiththeirpreferredtreatment.Theremayalsobeconcernswithliabilitywhen
multipleprovidersaresharingaccountabilityinateambasedapproach.Payersneedtobeawareofand
acknowledgetheseconcerns.Withmaternitycare,liabilitylawsfortheclinicians(includingOB/GYN,
midwives,andbirthcenters)varyacrossstatesregardingbirth;thoseestablishingamaternitycare
initiativeshouldhaveanunderstandingoftheirstatelaws.
Manystateshavecreated,orareconsideringcreating,regulationsdesignedtoensurethatprovidersdo
nottakeonalevelofriskthattheymightnotbeabletosupportwithoutharmingthepatientorother
consumers(regardlessofwhetheritischaracterizedasinsuranceorservicerisk).
Inaddition,wenotethat,givenlimitsonreassignmentofclaims,ifastatepaysFFSforEJR,Maternityor
CardiaccareunderMedicaiditmaynotbefeasibletoprospectivelypayforaclinicalepisodeofcareto
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oneaccountableentitythatwouldthenremunerateotherproviders.16Wehighlightthisissuefor
maternitybecauseoftheimportanceofMedicaidasapayer,butitisrelevanttotheepisodetypesas
well.
Inthematernitycontext,wefoundevidencethatitmaybehelpfulforthevariousparticipantstoknow
thataseriesofevaluationsofrigorousqualityimprovementprogramshasdocumentedrapidly
plummetingliabilityclaims,payments,andpremiums(Sakala,Yang,&Corry,2013).Itwillbeimportant
toincludethesedimensionsofcareinevaluationsofepisodepaymentmodelsbecauseofthis
relationship.

RegulatoryAreasThatMayAdditionallyImpactMaternityPaymentStrategy
Statesdefinethetypesofproviders,includingpractitioners,andsettingsofcarethatsupportbirth.They
definelicensureandcertificationofprovidersandthescopeofpracticeunderwhichtheproviders
operate.Ataminimum,theseregulationswillimpactdecisionsrelatedtoparticipatingproviders,services
covered,andepisodepricedetermination.Forexample,lawsthatrequirewrittenagreementsfortransfers
betweenbirthcentersandhospitalsorthatrequireOB/GYNsupervisionofbirthsinabirthcentercanlimit
theavailabilityofthatbirthingoptionifnohospitalorOB/GYNiswillingtoengageinsuchanagreement.
Otherstatelawscreateadifferentminimumlengthofstayforabirththanthefederalminimumandmay
alsoneedtobeconsidered.
TheMedicaidcontextisimportanttoconsider,givenalargenumberofbirthsarepaidforbyMedicaid.A
highpercentageofthosebirthsarepaidthroughMCOs;therefore,itwillbeimportanttoconsiderthe
mannerinwhichastatecontractswithMCOs.Thesecontractsmustdeterminewhetherstatescould
encouragesuchpaymentarrangementsorwhethertheMedicaidMCOsmaybeinterestedinpayingfor
maternitycareinthatmannerwithoutstateencouragement.Thereareexampleswherebyastate
encouragesthesetypesofpaymentarrangementsthroughtheircontractedMCOs;whereas,otherstates
haveMCOsbuildbundledpaymentsformaternitycareintotheircontractswithproviderswithoutstate
encouragement.Wenotethat,givenlimitsonreassignmentofclaims,ifastatepaysFFSforbirthsunder
Medicaiditmaynotbefeasibletoprospectivelypayforaclinicalepisodeofcaretooneaccountableentity
thatwouldthenremunerateotherproviders.
Manystateshavecreated,orareconsideringcreating,regulationsdesignedtoensurethatprovidersdo
nottakeonalevelofriskthattheymightnotbeabletosupportwithoutharmingthepatientorother
consumers(regardlessofwhetheritischaracterizedasinsuranceorservicerisk).

SeeSection1903(a)(32)oftheSocialSecurityActandtheregulationsat42CFR447.10.)

16

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4. InteractionbetweenCEPandPopulationBasedPayment

Howdoclinicalepisodepaymentandpopulationbasedpaymentinteracttomove
paymentreformforward?

AstheLANdevelopsrecommendationsspecifictoimplementingeitherclinicalepisodepaymentor
populationbasedpayment,questionsarisefromthoseinthefieldwhoseeopportunities,oratsome
pointinthefuture,mandates,relatedtoimplementingbothofthesealternativepaymentmodelswithin
oneorganization.Therearemanyquestionsthatpayers,purchasers,andproviderswillneedtothink
aboutandaddresswhendeterminingwhetherandhowtoimplementmultiplepaymentmodels.The
discussionherecentersonintegratingbothCEPandPBP,butmayapplytootherAPMsaswell.
Itiscriticalthatthedecisiontoimplementbothofthesepaymentreforms(eitherseparateortogether)
willbetakenwithinthecontextofabroaderstrategicgoal.AsthehealthsystemmovestowardAPMsof
alltypes,aclearvisionisneededtoavoidconfusionandunnecessarycomplexity.Insomeinstances,it
maybethecasethatusingCEPwillincentivizethenecessarydeliverysystemchangestoensureperson
centeredcare.Inotherinitiatives,payersmayimplementPBPandfindthatclinicalepisodeswithinthe
continuumofcarebecomepersoncenteredwithoutCEP.Establishingagoalforadoptingoneor
multipleAPMsandmeasuringmovementtowarditiscritical.
ImplementingoneAPM,eitherCEPorPBP,hasitsownchallenges;thesechallengesarecompounded
whenanorganizationconsidersimplementingbothtypesofAPMs.Questionsthatarisewhen
implementingbothCEPandPBPmayinclude:

Caninitiallyimplementingthemodelthatfocusesontherisklimitedtoanepisodeofcare(clinical
episodepayment)serveasatransitiontoimplementingthebroadermodelofpopulationbased
payment?Ifso,how?

WhataresomepotentialoperationalpracticesforimplementingCEPandPBPinanintegratedway?

CanClinicalEpisodePaymentServeasaTransitiontoImplementingPopulationBasedPayment?
AspolicymakersandpayersconsidervariousAPMs,themovementtowardPBPisoftendescribedasa
progressionfromlessdisruptiveformsofAPMstomoredisruptiveforms.Forexample,
accountabilityforvalueintheHCPLANFrameworkCategory2(FFSlinktopayment/quality)isonly
relatedtotheservicesprovidedbyindividualproviders.InCategory3,accountabilityforvalueisacross
severalsettingsandproviders,butnotall.Category4holdsoneentityaccountableacrossallcareforthe
enrollee.ThusonequestioniswhetherCEPcan(orshould)serveasanappropriatesteppingstone
towardapotentialgoalofbroadpopulationbasedpayment.
Whileitmaybethecase,asnotedbelow,thatimplementingCEPbeforeaPBPreformmayhelpbuilda
foundationforPBP,itisalsothecasethatCEPisagoalonitsown.CEPcanbequitecomplexto
implementasitrequiresdefininghardtodefinebeginningsandendingsofepisodeswithinthe
continuumofpatientcareandalsoseparatingoutthecostsoftheepisodefromothercostsofcare.
Thesedistinctionsarenotalwaysclear.Thus,implementationofCEPshouldnotbeconsideredonlyasa
steppingstonetoPBP.ItmayalsobethecasethatapayerorproviderfindsCEPonitsowntobe
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effectiveatfocusingonthetypesofcareofmostinteresttoitspopulationandthus,seenoneedto
implementPBP.
WhileCEPcanbeimplementedonitsown,belowaresomewaysinwhichCEPcouldencouragethe
developmentofinfrastructureandrelationshipsamongprovidersthatwouldbeusefulformoving
towardPBP:

Encouragingproviderstocreatemechanismsforcoordinatingacrosssettingswithinaclinical
episodeand,potentially,withprimarycarebeforeandaftertheepisode.Themechanismsand
infrastructureneededtofacilitatethiskindofcoordinationwouldcreateafoundationfor
coordinatingcareinaPBPenvironment.

Creatingexpectationsforaccountabilitybeyondaprovidersownsettingandforthepatientover
time.Accountabilityacrosssettings,clinicians,andphasesofthecarecontinuumiscriticalforPBP
andCEP.Acultureofsharedaccountabilityandteambasedcareisparticularlyimportantgiventhe
needtomeasurepatientreportedoutcomesandkeyqualitymetricsacrosssettingsinbothmodels.

Incentivizingnewstructures,includingcaremanagementprotocols,informationsharingsystems,
andongoingqualityimprovementprogramsthatmakeitmorefeasibletotakeonadditionalrisk.

Providingexperienceforproviderstolearnhowtotakeonfinancialriskanddistributepayment
acrossproviders.

CliniciansparticipatinginaCEPmodelwilllikelyneedtoshareaccountabilityacrossmembersofa
patientscareteam,andwillrequiretheinfrastructuretosupportthat.Buildingthisinfrastructurefor
CEPmaymakeiteasierforthemtobecomeanentitycapableoftheriskinvolvedinaPBParrangement.
Fromthepayerorpurchaserperspective,itmaybeeasiertobeginwithCEP,asitrequireslesschangein
organizationbillingsystemsandwillbeappliedtoasmallersubsetofclaims.Asbillingsystemsbecome
morefacileatgroupingclaimstodefinetheepisodes,thatcapacitycouldbeusedtoassisttheprovider
organizationintargetingtheirinterventionsonepisodesandconditionswiththegreatestopportunity
forimprovementandcostsavingsunderaPBPmodel.
OperationalizingIntegratedCEPandPBPModels
Inanintegratedmodel,itispossiblethattheclinicalepisodepaymentwillnestwithinthepopulation
basedpayment.ThisisbecauseaPBPmodelholdstheaccountableentityresponsibleforthecostsand
qualityofcareforallservicesanalignedenrolleeusesacrossacontinuumofcare,whiletheCEPmodel
willfocusontheepisodicportionofthatcare.Fromaclinicalperspective,havinganaccountableentity
underaCEPprogramwithinaPBPmodelcouldcomplementtheprimarycarefocusofthePBPmodel.
ThePBPaccountableentitywillhaveaneedtopreventsomehighcostepisodes,butalsotoeffectively
managethosethatdooccur.Inthisway,CEPcouldassistthePBPaccountableentityreachitsfinancial
andqualitybenchmarkgoalsbymanagingspecifichighcost,highvolumeepisodeswithinthe
continuumofcare.However,thiscomplementaryrelationshipisonlyfeasibleiftheproviders
themselvescoordinatetheprimary,specialty,andpostacutecareforthepatientbothbeforeandafter
theepisode.
Beforetacklingtheseclinicalquestions,however,thereareanumberofoperationalissuesthatmustbe
addressedwhentwoentitieshaveresponsibilityforcoststhatmayariseforonepatient,butcouldbe
attributedtobothaclinicalepisodeandapopulationbasedcareservice.Theprimaryissuewhen
integratingCEPandPBPisthatapatientmaybeattributedtotwoentitiesatthesametime:thePBP
entityfortotalcostofcare,andtheCEPentityifthepatientneedscarethatalignswithaclinical
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episode.Usingacarveoutmechanismorsomevarietyofcarveoutcanaddressthissituation.Inthe
threecarveoutexamplesprovidedbelow,weassumethateachsituationinvolvesasinglepayer
(Medicare,stateMedicaidagencyorMedicaidorMedicareMCO,oracommercialpayer)implementing
bothCEPandPBPinthesameregion:
1. BasicCarveOut:Themoststraightforwardwaytoaddressthisistocarveoutthedollars
representedbythoseepisodesfromthetotalcostofcarebaselinecalculationforwhichthePBP
entityisaccountable.Thepayerwouldkeeptrackofthemembersandtheircostsassignedto
theseepisodes,andsubtractthemoutwhenpaymentisreconciled.Thebenchmarkswouldbe
basedontheseamounts.
2. CarveOutwithMetricBasedProviderAccountability:Acriticismofthebasiccarveoutisthatit
providesnoincentiveforthePBPentitytocoordinatewiththeCEPentityforthingssuchas
upfrontshareddecisionmaking,orhighquality,coordinated,followupcareforthepatientpost
discharge.Onewaytoaddressthismightbe(whenusingthebasiccarveoutmethodology)to
usequalitymetricstoholdprovidersaccountable,andencouragePBPentityproviderstowork
withtheCEPentitytomakesurethememberorpatientreceivedseamlesscarearoundthe
episode.
3. CarveOutwithSavingsAssignedtothePBPEntity:Anothercriticismofapurecarveoutisthat
carvingoutthecostsofanepisoderemovespartoftheincentiveforentitiestoenterintoPBP
arrangementsastheyarenotabletoobtainallofthesavingsfromtheirefforts.Onewayto
addressthisistoeitherestablishthepricelessthanthehistoricaverageepisodeprice
(essentiallybuildinginaguaranteeddiscountlevel).ThePBPcouldabsorbtheseupfrontsavings
whiletheCEPentitywouldaccepttheriskbeyondthatamount.
Forsomeproviders,thisdiscussionmaystillbeintherealmofthetheoretical.Forproviders
participatinginvariousACOmodelsandwishingtoparticipateinanewepisodebaseddemonstration
initiative,thesequestionsandchallengesareimportant.AsAPMimplementationevolves,thehopeis
thatpromisingpracticeswillemergetosupportprovidersandpayersinsuccessfuldesign,
implementation,andsustainabilityofsuchintegratedmodels.

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Chapter7:Conclusion
Overall,therecommendationsdevelopedbytheCEPWorkGroupincludedesignelementsand
operationalconsiderationsthattogetheraredesignedtosupportAPMalignment.TheWorkGroup
recognizedthatimplementationmustbetailoredtomarketconduciveness,organizationalreadiness,
andthecharacteristicsofparticularinitiatives.Forthatreason,compromiseswillsometimesbe
necessarytoachievethegoalofalignment.Whencompromisesaremade,thereshouldbejustifiable
reasonsfordivergencefromtheWorkGroupsrecommendations.
TheCEPWorkGroupalsorecognizesthattherearemanyadditionalelementsthatcanbehelpfulin
deployingepisodebasedpaymentprograms.Theseincludetechnicalassistance,detailedspecification
ofcaredeliverymodels,andalignedbenefitdesigns.Whileimportant,theseelementsareoutofscope
fortheWorkGroupduetothechargefromtheLANGuidingCommitteeandthedesignatedfocusofthe
LAN.
Finally,therecommendationsandimplementationoptionsdescribedinthebodyoftheWhitePaperare
directedtowardallstakeholders.ItistheintentionoftheCEPWorkGroupthatpayers,providers,
consumers,patientsandtheirfamilycaregivers,purchasers,andstateswillallconsiderthese
recommendationsandoptionsasstartingpointsforcriticalconversationsabouthowtoworktogether
topromotealignedadoptionofepisodepaymentmodels.Specificprioritiesformovingthiswork
forwardaredescribedbelow.

MovingForward:PrioritiesforSupportingEpisodePayment
TheWorkGroupsrecommendationsincludeactionsthatarefeasibleforstakeholderstoimplementin
thecurrentenvironment;infact,manyarebasedonexistinginitiatives.Atthesametime,therearea
numberofotherareasinwhichevolutionisstillnecessaryinordertofullyoptimizetheimpactthat
APMs,ingeneral,andepisodepayment,inparticular,mayhaveonpatientsandthehealthcaresystem.
Whilethefollowinglistisnotexhaustive,thefollowingissuesstandoutasbeingnecessaryintheshort
termformovingthefieldofepisodepaymentforward:
CreatinganInfrastructurethatSupportsPersonCenteredCare:Thedesignandimplementationof
personcenteredepisodepaymentmodelsrequirestheabilityofprovidersandpatientstoengagein
shareddecisionmaking,sharedcareplanning,sharingofcriticalinformationoncostandquality,and
systematiccarecoordinationthatputsthepatientfirst.Addressingtheneedforanoverarching
infrastructurethatallowsalloftheseinteractionstooccuriscentraltosupportingepisodepayment.
TransparencyofCostData:Allstakeholdersneedtransparent,detaileddataonepisodebasedcare
pricesthatpayersnegotiatewithproviders.Havingthisdataavailableviaatrustedsourcewillallow
purchasers,payers,patients,andconsumerstomakeinformeddecisionsintheepisodepayment
process.Inaddition,informationonregionalcostvariationandonhowvariationrelatestodifferent
circumstancesisparticularlyvaluable.Ideally,participantswillbeabletocompareepisodetoFFScosts,
andunderstandcostimplicationsfortheirsituation.
ProviderandSystemReadiness:Individualprovidersmayhaveinterestinparticipatinginanepisode
paymentinitiative;however,inorderforepisodepaymenttobeeffective,itrequirescoordination
amongacollaborativecareteamthatincludesbothclinicalprovidersandpayers.Mostmarketslackthe
systemsandinfrastructuretosupportthistypeofcollaboration,andarestillhallmarkedbysiloedcare
environmentsthatdonotsharecommondataorpaymentsystems.Addressingthereadinessofboth

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providersandthesystemsinwhichtheydelivercarewillbecriticaltoeasingthepathtowardgreater
episodepaymentimplementation.
QualityMeasurement:Whiletherearemeasuresofprocessstandards,patientoutcomes,patient
engagementtools,andfunctionalstatusassessmenttoolsavailabletoday,thereareconcernsabout
howwellthesetoolssupportprovidersandpayersabilitiestoassesswhetheraproceduretruly
improvedtheoutcomeforanindividualpatient.Continueddevelopmentofkeymeasurescapableof
measuringqualityacrosssettingsofcarewillbecriticalfortheeffectivenessofepisodepayment
models.
HighValue,UnderusedServices:AsnotedinthebodyofthisWhitePaper,awidevarietyofhighvalue
services(boththosecurrentlycoveredandothersnoncovered)areunderusedtoday.Especiallywithin
maternitycare,researchsuggeststheirusecanincreasevaginalbirthrates,lowerpretermbirthrates,
andprovidenecessarysupportforchildbearingwomenandnewbornsthroughouttheepisode.There
areanumberofepisodepaymentdesignelementsthatpointtoensuringpaymentmodelsincentivize
theuseofthesehighvalue,underusedservicesacrossallepisodepaymentmodels.
LowValue,OverusedServices:Alsonotedinthispaperisthefactthatthecurrenthealthcaresystemis
overusingservicesthatdonotprovidevaluetothepatient.Theseservicesmaycomeintheformof
unnecessarydiagnosticsorprocedures.Thegoaloftheepisodesdescribedhereinistoreducethe
incentivestoprovidersforincludingthesetypesofservicesintheircareprocess,andreplacethemwith
servicesthatarehighvalue,andareappropriateforagivenpatient,basedonclinicalassessmentand
thepatientspreferencesandvalues.

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AppendixA:Roster
CEPWorkGroupChair
LewSandy,MD
ExecutiveVicePresident,ClinicalAdvancement,UnitedHealthGroup

CEPWorkGroupMembers
AmyBassano
DeputyDirector,CenterforMedicare&MedicaidInnovation
EdwardBassin,PhD
ChiefAnalyticsOfficer,ArchwayHealth
JohnBertko
ChiefActuary,CoveredCalifornia
KevinBozic,MD
Chair,DepartmentofSurgeryandPerioperativeCare,DellMedicalSchool,theUniversityofTexasat
Austin
AlexandraClyde
CorporateVicePresident;GlobalHealthPolicy,Reimbursement,andHealthEconomics;Medtronic
BrooksDaverman
DirectorofStrategicPlanningandInnovation,DivisionofHealthCareFinanceandAdministration,State
ofTennessee
FranoisdeBrantes
ExecutiveDirector,HealthCareIncentivesImprovementInstitute
MarkFroimson,MD
ExecutiveVicePresident,ChiefClinicalOfficer,TrinityHealth
RobertLazerow
ManagingDirector,ResearchandInsights,theAdvisoryBoardCompany
CatherineMacLean,MD,PhD
ChiefValueMedicalOfficer,HospitalforSpecialSurgery
JenniferMalin,MD
StaffVicePresident,ClinicalStrategy,Anthem
CarolSakala,PhD,MSPH
DirectorofChildbirthConnectionPrograms,NationalPartnershipforWomen&Families

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RichardShonk,MD,PhD
ChiefMedicalOfficer,theHealthCollaborative
StevenSpaulding
SeniorVicePresident,EnterpriseNetworks,ArkansasBlueCrossBlueShield
BarbaraWachsman
Chair,PacificBusinessGrouponHealth
JasonWasfy,MD
DirectorofQualityandAnalytics,MassachusettsGeneralHospitalHeartCenter

CMSAlliancetoModernizeHealthcare(CAMH)Staff
CAMH,sponsoredbyCMS,isanFFRDCoperatedbytheMITRE Corporation.MITRE ischarteredto work
inthepublicinterest.
TanyaAlteras,MPP
LANCEPWorkGroupLead
KarenMilgate,MPP
LANSubjectMatterExpert
AnneGauthier,MS
LANProjectLeader
AmyAukema,MPP
LANDeputyProjectLeader
LeahAllen
LANProjectSupport

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AppendixB:Acknowledgements
TheCEPWorkGroupwouldliketothankthefollowingindividualsfortheirinvaluablefeedbackduring
theresearchanddevelopmentofthisWhitePaper.
PaulCasale,MD
ExecutiveDirector,NewYorkQualityCare
BoardofTrustees,AmericanCollegeofCardiology
JohnOShea,MD
CardiothoracicSurgeon
Member,SocietyforThoracicSurgeons
AndreaRusso,MD
CooperHeartInstitute,CooperUniversityHospital
Member,AmericanCollegeofCardiology
JeffreyB.Rich,MD
SentaraNorfolkGeneralHospital

PastPresident,SocietyforThoracicSurgeons(20122013)

TriciaBalazovic
AdministrativeDirector,TheMinnesotaBirthCenter
FredBuckwold,MD
SeniorVicePresident,CommunityHealthChoice
SteveCalvin,MD
MedicalDirector,TheMinnesotaBirthCenter
KarenLove
ExecutiveVicePresidentandChiefOperatingOfficer,CommunityHealthChoice
TomRaskauskas,MD
MedicalDirector,FedelisCare
Member,LANPopulationBasedPaymentWorkGroup
BrynnRubinstein
SeniorManagerforTransformingMaternityCare,PacificBusinessGrouponHealth

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AppendixC:ElectiveJointReplacementBundledPaymentModels
Thisappendixpresentsasummaryreviewofselectedelectivejointreplacementinitiatives.Resultsreportedarebasedonstudiesofvaryingstatisticalrigorandextrapolatedfrompublications.

CMSACE
demonstration

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

MedicarePartA
andPartBservices
providedduringan
inpatientstay

AdmitsforMS
DRGs469and470

Limitedlistofservice
exclusions

Healthsystem

Prospective
Payment

Upsideand
downsiderisk

Noexplicitquality
tietopayment
methodology

NA

Medicarepayments
decreased;savingsshared
withbeneficiariesnot
accountedfor.

Limitedlistof
population
exclusions

IPandOPinan
admission,including
somepreop

Competitive
biddingbysiteson
avoluntarybasis
toprovide
orthopedic
servicesto
Medicarepatients
ininpatient
settings

Voluntarygain
sharingwith
providers

PartAandBinan
admission,including
somepreopservices

Builtindiscount
IncreaseinPartBcosts.

DischargestoPAClesslikely.

Decreaseinreadmissions.
Mixedresultson
complications.

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CMSBundled
PaymentforCare
Improvement
(BPCI):Model217

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

Inpatientstay
through30,60,or
90dayspost
dischargeexcept
hospice

AdmitsforMS
DRGs469and470

Allrelatedinpatientstay
costsinacutecareand
postacutecareandall
relatedservicesfor90
dayspostdischarge

Acutecare
hospital,
physician
grouppractice,
orawardee
convener

FFSwith
retrospective
reconciliation

Reconcileactual
costagainsta
bundledpayment
amountforthe
episodeofcare,
whichisbasedon
historicalFFS
payments

Upsideand
downsiderisk

Noexplicitquality
tietopayment
methodology

NA

Earlyevaluation(basedon
onequarteronly)found:

Awardeesselect
episodelength

Limitedlistof
population
exclusionsfor
unrelatedPartB
servicesandPartA
inpatient
readmissions

AllnonhospicePartA
andPartBservices

Voluntarygain
sharingwith
providers

Increasing
upsideand
downsiderisk
overtimeto
stoplossand
stopgainlimits

Lowerlengthsofhospital
stays.

PercentageofBPCIpatients
dischargedtoan
institutionalPACprovider
(SNF,IRF,LTCH)decreased
from66%inthepreBPCI
baselineto47%during
interventionquarter.This
proportionremained
relativelysteadyat6260%
forthecomparison
hospitals.

LowernumberofHHAdays
amongpatientswithatleast
oneHHAday.

17

Note:Model1notincludedasitisadiscountoffofIPPS,notaccountabilityacrossprovidersorsettings.
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CMSBundled
PaymentforCare
Improvement
(BPCI):Model317

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

Admissiontopost
acutecarewithin
30daysof
dischargethrough
30,60,or90days
aftertheinitiation
oftheepisode

AdmitsforMS
DRGs469and470

Providerfees(physician
andpostacutecare
services),related
readmissions,and
relatedPartBservices
(e.g.,lab,DME)

Postacute
careprovider,
providergroup
practice,or
awardee
convener

FFSwith
retrospective
reconciliation

Reconcileactual
costagainsta
bundledpayment
amountforthe
episodeofcare,
whichisbasedon
historicalFFS
payments

Upsideand
downsiderisk

Noexplicitquality
tietopayment
methodology

NA

Earlyevaluation(basedon
onequarteronly)found:

AllnonhospicePartA
andPartBservices
duringthepostacute
periodandreadmission

Voluntarygain
sharingwith
providers

Awardeesselect
episodelength

Limitedlistof
population
exclusionsfor
unrelatedPartB
servicesandPartA
inpatient
readmissions

Increasing
upsideand
downsiderisk
overtimeto
stoplossand
stopgainlimits

AveragePACdayslower
thancomparison.

Mostofdifferencewas
presentpriorto
demonstration.

HHApaymentsincreased
moreinBPCIsitesvs.
comparisonsites.

Samplewasverysmall.
CMSBundled
PaymentforCare
Improvement
(BPCI):Model417

Hipandknee
replacement

Entireacutecare
hospitalstayand
related
readmissionsfor
30days

AdmitsforMS
DRGs469and470

Limitedlistof
population
exclusionsfor
unrelatedPartB
servicesandPartA
inpatient
readmissions

Allrelatedservices
providedbythehospital,
physician,andother
practitioners

Acutecare
hospitalor
Awardee
Convener

Prospective
payment

Singlebundled
paymentforall
relatedservices

Upsideand
downsiderisk

Voluntarygain
sharingwith
providers

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Noexplicitquality
tietopayment
methodology

NA

Resultsnotyetavailable

CMS
Comprehensive
CareforJoint
Replacement
(CJR)

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

Admissionthrough
90dayspost
dischargeforall
PartAandPartB

AdmitsforMS
DRG469and470

Limitedlistofservice
exclusions

Hospital

FFSwith
retrospective
reconciliation

Reconcileactual
spendingagainst
targetpricessetby
riskstratification
methodologyeach
year

Upsideand
downsiderisk

Payment
methodology
includes
complications,
HCAHPS,and
voluntaryreporting
ofpatientoutcome

NA

Notyetavailable.

Competitivelyset
pricethatisa
negotiated
bundledpayment
forsurgical
procedures
performedby
Centersof
Excellence

Upsideand
downsiderisk

ReplicatesCMSand
BREECollaborative
orthopedic
complication
definitionsand
measures

Patient
navigator
provides
patientsand
caregivers
with24/7
supportatthe
Centersof
Excellence

Employersavingson
procedureepisodes;
employeetravelandlodging
included.

Subjecttolimited
exclusions

PBGH
Employers
Centersof
Excellence
Network(ECEN)
withWalmart,
Lowes,
McKesson,and
JetBlue

Hipandknee
replacement

Consultation,care
andtravelthrough
postopclinical
care.

Voluntarygain
sharingwith
providers

Limitedlistof
population
exclusions

Employee
populationwilling
totraveltoa
centerof
excellencepaysno
copaysorcost
sharing;traveland
lodgingforpatient
andcaregiver
providedby
employer

SomeBMIand
other
appropriateness
criteriaappliedto
definitionof
bundleandtothe
certificationofthe
Centersof
Excellence

EpisodebasedonMS
DRG469and470

Hospital/
healthsystem

Prospective
payment

Bundleincludeshospital
charges,physicianfees,
affiliatedservices(PT,
homehealth)for710
daybundle

Increasing
upsideand
downsiderisk
overtimeto
stoplossand
stopgainlimits

Otherappropriateness
criteriaappliedto
definitionofbundleand
CentersofExcellence
certification

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Additionally,
completionrates
andaveragechange
inHOOS/KOOSand
allincidentsof
unanticipated
medicalcare

Integrated
Healthcare
Association
aregionalhealth
care
improvement
collaborative
withseveral
healthplansand
hospitals

GeisingerHealth
System(GHS)
ProvenCareTotal
HipandTotal
Knee
Replacement
Initiatives

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Relied
primarilyon
PROMETHEUS
Evidence
basedCase
Rates(ECRs)

Admissionthrough
related
readmissions
within90daysof
hospitaldischarge.

Limitedlistof
eligiblepatientsto
avoidcomplexities
ofriskadjustment

Specificlistofservices

Hospitals

Prospective
payment

Fixed,singleprice,
coveringall
medicalcarefor
theepisode
includingphysician
fees,inpatient
stay,tests,and
devices.

Upsideand
downsiderisk

Notyet
implemented

NA

Resultsfromthestudywere
developedintoseveral
papersonimplementation
issues.(SeeAppendixF.)

Inpatient,Outpatient,
andPostAcuteCare
withsomepreoperative
careincluded

GHSfacilityor
GHSprovider

Prospective
paymentwith
retrospective
reconciliation

Setpricefor
episodeofcare

Upsideand
downsiderisk

Complications

"Patient
Compact"was
developedso
thatpatients
couldbecome
partnersin
theirown
care.

50%decreasein
readmissions.

Doesnotinclude
postacutecareas
itwouldhave
requiredmultiple
newcontracts
Hipandknee
replacement

Admissionthrough
90dayspost
discharge

AvoidhighBMI,
thosewithhigh
severityscores

Appropriateness
criteria

Limitedexclusions
basedon
prospective
provider
consensus

Readmissions

AdherencetoBest
PracticeElements

10%decreaseinlengthof
stay.

Twooftheirprograms
certifiedforexceeding
nationalbenchmarksforhip
fracturecare.

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ArkansasHealth
Care
Improvement
Initiative
Medicaidand
commercial
payers

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

Inpatientor
Outpatient
Admissionand
PostAcuteCare
through90days

Differential
definitionsof
population
includedbasedon
thepointoftime
inthetrajectoryof
theepisode

Differentialdefinitionsof
whatservicesare
includedbasedonthe
pointoftimeinthe
trajectoryoftheepisode

Orthopedic
surgeons

FFSwith
retrospective
reconciliation

Sharedsavingsand
includesabuiltin
discountonthe
targetprice

Upsideand
downsiderisk

Readmissions

NA

Overtwoyearperiod(See
January2016reportfor
morespecifics).

Fewercases
includedinthelast
31to90days,for
example

Downsiderisk
limitedto
relativelyhigh
spendinglevels

Fewercasesincludedin
thelast31to90days,
forexample

30daywound
infection

Frequencyof
prophylaxisforDVT
andPE

ARBCBStrendforLOSfrom
2.7to2.3from2013to
1014.

Medicaid2013to2014.
TreatmentforDVT
andPE

30daywoundinfection
decreasedfrom2.0%to
1.7%.

Postopcomplications
increasedfrom8%to14%.

ProphylaxisforDVT/PE
increasedfrom13%to
17.4%

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PROMETHEUS/H
ealthCare
Improvement
Initiative
Institute(HCI3)

Episode
Definition

EpisodeTiming

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Hipandknee
replacement

30dayspriorto
inpatientor
outpatient
admissionthrough
180dayspost
discharge

Detailedlistof
relevant,
qualifying
diagnosiscodesfor
patientinclusion

Detailedlistsof
procedurecodesfor
inclusionofservices

Variesbased
onthe
initiative;can
beeitherthe
facility,the
practice,or
both

Canuseeither
prospective
paymentor
FFSwith
retrospective
reconciliation

Prospective:
Patientspecific
predictedbudgets,
whichare
negotiatedupfront
duringcontracting

Contractscanbe
basedonupside
only,
upside/downsid
e,withor
withoutstop
loss,andwith
upsidetiedto
quality
scorecards

Buildsinsavingsfor
potentially
avoidable
complications

NA

Variesbypayerand/or
provider.

Upsideand
downsiderisk

30dayreadmission
rate

NA

Notyetavailable.

Retrospective:FFS
paymentallows
forseverity
adjustmentbased
onriskfactorsto
budgetforper
patientcosts
Tennessee
Divisionof
HealthCare
Finance&
Administration
EpisodesofCare

Hipandknee
replacement

Treatmentof
chronic
arthritis

Claimsrelatedto
totaljoint
replacement
beginning45days
priortoadmission

Procedure
Postacutecare
relatedto
procedure

Patientswithan
inpatientor
outpatienthipor
kneereplacement
procedurecode

IncludesPT,certain
medications,and
treatmentfor
complicationsdue
infections,bloodclotsor
readmissions

Orthopedic
surgeon

FFSwith
retrospective
reconciliation

Reimbursement
forepisodeisrisk
adjustedusing
historicalclaims
data

Sharedsavings
potential

Limitedbusiness,
clinical,patient,
andhighcost
outlierexclusions

Payersadjustover
timebasedonnew
data

Acceptable,
commendable,
andgainsharing
limitthresholds
areset

Upto90dayspost
discharge

Setofmeasures
evaluating
potentially
avoidable
complications

30daypost
operativeDVTorPE

90daypost
operativeinfection
rate

90daypost
operative
dislocationor
fracturerate

AverageLOS

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AppendixD:MaternityCareBundledPaymentModels
ThisappendixpresentstheSummaryReviewofSelectedMaternityCareInitiatives.Resultsreportedarebasedonstudiesofvaryingstatisticalrigorandextrapolatedfrompublications.

Tennessee
HealthCare
Improvement
Innovation
Initiative

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Lowrisk
pregnancy
withlive
birth

40weeksprior
todelivery
through60days
afterdeliveryor
discharge

Motheronly

Prenatal:Relatedmedical
claims,relatedmedication,
oremergencydepartment
claims

Physicianor
midwifewho
deliversthebaby

FFSwith
retrospective
reconciliation

Upsideand

Gainsharing:
Screeningratesfor
HIV,groupB
streptococcus(GBS),
cesareansection

NA

Availablelate2016

Exclusions:Various
comorbidities,
maternaldeath,
anyindicationof
leavingAMA,
triggeringevents
occurringat
FQHC/RHC,and
useofTPL

Delivery:Allclaims

GlobalBilling
Code:TaxIDof
thebilling
providerorgroup

PostpartumDays130:
NonInpatientAdmissions
(readmissions),EDclaims
notresultingin
readmission,other
pharmacy/professional/
facilityclaimswithan
inclusioncode

NoGlobalBilling
Code:TaxIDof
thebilling
providerorgroup
responsiblefor
delivery

Endofanepisode:
Costsaretotaled
andadjustedusing
ariskweightbased
on:woman'sage,
healthconditions,
andcomplications
duringpregnancy.

downsiderisk

PAP'sendofyear
averageadjusted
costiscompared
to
"Commendable"
and"Acceptable"
levelsestablished
byeachpayer.

PostpartumDays3160:
Allrelatedmedicalclaims
andmedications

Pregnancieswitha
costgreaterthan
the99.73rd
percentileafter
adjustmentand
certain
comorbidity
pregnancieswillbe
excludedfrom
PAP'sannual
averageadjusted
cost.

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Informationalonly
(notforgainsharing):
Screeningratesfor
gestationaldiabetes,
asymptomatic
bacteriuria,hepatitisB
specificantigen,Tdap
vaccination

Arkansas
HealthCare
Payment
Improvement
Initiative

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Lowrisk
pregnancy
withlive
birth

Roughly40
weeksbefore
deliverythrough
60days
postpartum

Motheronly

Inclusions:Allprenatal
care,carerelatedtolabor
anddelivery,and
postpartummaternalcare,
includinglabs,imaging,
specialistconsultations,
andinpatientcare

Physicianornurse
midwife(provider
orprovider
group)who
deliversthebaby
andperformsthe
majorityof
prenatalcare
(identifiedby
claimswiththe
appropriate
globalOBbundle
procedure,
prenatalcare
bundle
procedure,or
officevisit
procedure)

FFSwith
retrospective
reconciliation

Upsideand

Performancemetrics
arelinkedtopayment,
butreportingmetrics
arenot.Costsavings
requireaproviderto
meetquality
thresholdsonall
performancemetrics
andreportdatafor
reportingmetrics.

NA

Medicaidcesareansection
ratereducedfrom38.6%
(baseline)to33.5%(2014),
withanestimated24%
directsavingstodate.

Exclusions:Various
comorbiditiesand
highrisk
pregnancy

Exclusions:Patientcosts
thatareincurredduring
theepisodetimeperiod
thatarenotrelatedtothe
maternityepisode

FFSpayments
duringepisode,
retrospective
adjustmentbased
uponpatient
comorbidities

downsiderisk

Provideraverage
episodecostis
comparedto
Commendable,
Acceptable,
Unacceptable
thresholdsthatare
establishedby
eachpayer
annually.When
providershave5+
episodes,an
averageepisode
costinthe
Commendable
range,andhave
metthequality
metrics,theyare
eligibletosharein
savings.For
providersthat
have5+episodes
andanaverage
costinthe
Unacceptable
range,theyshare
intherisk.

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QualityMetrics(80%
threshold):prenatal
screeningsand
appropriateutilization
ofdiagnostictests
Performancequality
metricslinkedto
sharedsavings:HIV,
GBS,andchlamydia
screenings.

Reportingonly
metrics:gestational
diabetesscreening,
UTIorasymptomatic
bacteriuriascreening,
hepatitisBspecific
antigenscreening,and
cesareansection
utilizationrate.

Preliminaryresultsshowan
increaseinreported
screenings.From2012to
2014,chlamydiascreening
increasedfrom65%to90%
andgroupBstrepscreening
increasedfrom90%to93%.

Community
HealthChoice

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Lowrisk
andhigh
risk
deliveries
with
severity
markers

Mother:270
dayspriorto
deliverythrough
60dayspost
discharge

Motherand
newborn

Allprenatalcareand
OB/GYNsfrom
servicesrelatedtodelivery. two
multispecialty
groupproviders
whoare
Blendedcesareansection
participatingin
andvaginaldeliveryrate
thepilot

Newborn:Initial
deliverystay
andall
services/costs
upto30days
postdischarge

Exclusions:
Firstphase:
CurrentlyLevel4
NICUstay
Secondphase:
Planningonusing
individualstop/loss
limits

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

FFSwith
retrospective
reconciliation

Upsidereward
onlyinYear1
withmoveto
upsideand

Normalbirthweight:
Prenatalcareand
screenings;Delivery
care(cesareansection
rate,elective
deliveries);
Postpartumcarewith
depressionscreening;
Babycare
(breastfeeding,
hepatitisBvaccine)

Activewith
community
groupsthat
promote
prenatalcare

Resultsnotyetavailable

Usehistorical
averagecostsand
adjustbasedon
riskfactors(e.g.,
age,comorbidities,
clinicalseverity
markers).
Year1:Usequality
scorecardfor
monitoringand
setting
benchmarks.

Blendednurserylevels1,2,
and3
Exclusions:Level4NICU
stays

Downsiderisk
inYear2
Reconciliation
occursatthe
endofeach
yearofthe
pilot.

Year2:Setquality
thresholdsfor
sharedsavings.
Year3and
beyond:Move
awayfromcurrent
contractual
paymentstoflat
dollarorother
budgetpayments
with
reconciliation.

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Lowbirthweight:
Similartoaboveplus
NICUinfectionrates
Patientreported
outcomemeasures:
Hardcopysurveyis
mailed,andresultsare
acceptedinhardcopy
oronline.
Additionalmeasures
formonitoring
purposes

Providence
Health&
Services

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Lowrisk
pregnancy

Positive
pregnancy
confirmation
until6weeks
afterdelivery

Motherand
newborn

Allprenataland
postpartumcare,including
checkups,prenataltests,
education,psychosocial
support,labor,delivery,
hospitalstay,and
postpartumcare.

Nursemidwife

Prospective

Fixed,negotiated
fee

Upsideand

NA

NA

Firstimplementationat
nursemidwifebasedclinic:
10%reductioninoverall
pregnancycostsanda
cesareansectionrateof19%

Fixedratefor
episode

Upsideand

103evidencebased
elementsofcareare
incorporated,
measured,and
trackedfor
compliance.

"Patient
Compact"was
developedso
thatpatients
couldbecome
partnersin
theirowncare.

Preliminaryresults:
Improvedinnearlyall103
measuresidentified;
reducedNICUadmissionsby
25%;23%reductioninNICU
use;26%reductionin
cesareansections;68%
reductioninbirthtrauma.

The
Pregnancy
CarePackage

Geisinger
HealthSystem
(GHS)
Perinatal
ProvenCare
Initiative

downsiderisk

Doulasandpatient
navigatorsarealso
includedservices.
Lowrisk
pregnancy
Exclusions:
Late
referrals,
highrisk
patients,
members
without
continuous
enrollment
duringthe
entire
episodeor
other
primary
coverage

Prenatal:
Identificationof
pregnancyin
thefirstor
second
trimester
Postpartum:
Concludeswith
postpartumvisit
2156dayspost
delivery

Motheronly
Exclusions:
Neonatalcare

Allprenatal,laborand
delivery,andpostpartum
care;atleast12continuous
weeksofprenatalcareand
deliverymustbe
performedbyaGHS
provider.

GHSprovider

Prospective

downsiderisk

Globalpaymentincludes
technicalandprofessional,
physician,consultations,
andsupportingclinicians

Since2011,Geisingerhas
notperformedanearly
inductionorelective
cesareanbefore41weeks
unlessmedicallyindicated.

Prenatal:Professionaland
outpatientservicesonly
Postpartum:Inpatient
readmissions,outpatient,
andprofessional
Exclusions:Careprovided
bynonGHSproviders

Nocostsavingshavebeen
madepubliclyavailableto
date.

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Pacific
Business
Groupon
Health(PBGH)

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Highand
lowrisk
pregnancy

Hospitallabor
anddelivery
only

Motheronly

Blendedcaserateforall
facilityandprofessional
feesrenderedduringlabor
anddeliveryforboth
vaginalandcesarean
sectionbirths

Hospital
accountablefor
thefacility
blendedrate.

Prospective

Rateforcesarean
sectionandvaginal
birththesameand
negotiated
betweenpayer
andhospital,and
payerand
physiciangroup,
respectively.

Upsideand
downsiderisk
withno
prospective
risk
adjustment

Rateofcesarean
sectionsperformed
amongprimary,low
risk(NTSV)births

NA

Threehospitalsinpilot
demonstrateda20%
decreaseincesareansection
rates,whichwassustained.

Smallbirthcenters
wouldreceive
incentive
paymentsforeach
participant
providedwith
enhancedservices.

Smallbirth
centers:upside
rewardonly

PBGHBlended
CaseRate

American
Associationof
BirthCenters
(AABC)
Bundled
Payment
Proposal

Medicalgroup
practice
accountablefor
theprofessional
blendedrate.
Lowrisk
pregnancy

Enrollmentin
freestanding
birthcenter
throughand
including6
week
postpartumcare
visit

Motherand
newborncare
throughfirst28
daysoflife

Prenatalcare,nutrition,
patientnavigation,care
coordination,discussionof
optionsforbirth,
breastfeedingand
childbirthpreparation
instruction,health
educationandsupportto
avoidpreventable
complications,laborand
birthinthebirthcenter,
newborncareandhome
visits

Freestanding
birthcenter
(FSBC)

FFSwith
retrospective
reconciliation

Incidenceof
unexpectednewborn
complicationsisalso
usedasabalancing
measure.

Largebirth
centers:upside
anddownside
risk

Largebirthcenters
wouldreceivea
bundledratefor
professionaland
facilityservices
withshared
savingsforoverall
costsavings.

Largebirthcenterincludes
labservices,ultrasound,
obstetrician,andperinatal
visits

Includesfacilityfeeand
professionalfeeattimeof
birthinthebirthcenter.

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Numberofprenatal
visits,cesareanbirth
rate,electivedelivery
before39weeks,
pretermbirthandlow
birthweightrates,
breastfeeding
initiationand
continuation,NICU
admissions,perineal
integrity,and
completionofthe6
weekpostpartumvisit

Also,nochangesin
incidenceofunexpected
newborncomplications.

Prenatal
education,
enhanced
prenatalcare,
doulas,peer
counselors,and
continuous
supportduring
laborandbirth.

Client
experience
surveys

Birthcenterstypically
achieveaveragecesarean
ratesof6%forwomen
admittedtobirthcenterin
labor,1.59%episiotomy
rate,and0.11%elective
deliveryratebefore39
weeksofpregnancy.

Baby+
Company

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Lowrisk
pregnancy

InitialOBvisitat
birthcenter
through6
weeks
postpartum

Motherand
newborn

Prenatalcare,birthingplan,
classes,postpartumcare,
newbornexam,metabolic
screen,andmedications

FSBCiflowrisk
pregnancy,
uncomplicated
delivery

FFSwith
retrospective
reconciliation

Incremental
percentageat
endofyearif
hitcertain
quality
markers

NTSVcesarean,early
electivedelivery,
exclusive
breastfeedingduring
birthcenterstay,
cesareanrateamong
womenwhoentered
laborinthebirth
center

Measuredby
loggingintoa
patientsEHRs
mirrored
interfacethat
allowsfor
patientsto
recordtheir
experiences.

Morethan90%engagement

Electronic
experience
surveysat32
weeksand
postpartum

CesareanrateforBClabors:
5.3%

Includesfacilityand
professionalfees

Workingwith
payerstoset
pricingbasedon
theoutcomes
(healthymother
andbaby)
Separatebundle
ratesiftransferred
before/during
labor

Exclusions:labs,
ultrasounds

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NTSVrate:11.8%
Earlyelectiverate:0%
Exclusivebreastfeedingrate:
100%

The
Minnesota
BirthCenter's
BirthBundleTM

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice

Leveland
TypeofRisk

QualityMetrics

Patient
Engagement

Results

Lowrisk
pregnancy

270daysprior
todeliveryand
56days
postpartum

Motherand
newborn

Prenatalcare,labswithin
normalOBpanel,
ultrasound,andperinatal
consultswithinreasonable
scope,andbirth

Birthcenter

Modelis
prospectively
determined
budgetbut
paymentis
currently
retrospective

Upsideand
downsiderisk
withinthe
bundle

Patientreported
outcomemeasures

Prenatal/
postpartum
caresurveys

Resultsnotyetavailable,but
significantlylowerlevelof
cesareansectionsthanthe
nationalaverage

Positive
incentive
paymentif
averagecosts
below
Commendable
levelsand
qualitytargets
aremet

LinkedtoIncentive
Payments:HIV
Screening,GBS
Screening,cesarean
Rate,PostpartumVisit
Rate

NA

NA

Usebirthcenter
historicaldata.

Professionalfees
onlyareincludedif
deliveredina
hospital.

Facilityfee(birthcenter
only,hospitalfacilityfee
outsideofbundle)and
professionalfeeattimeof
birth

Facilityfeesare
FFSoutsideof
bundle.

Babyassessmentand
facilityfeesatdelivery

Ifallcareiswithin
thebirthcenter,
facilityand
professionalfees
areincludedinthe
bundle.

24hourpostpartum
assessment

12weekand6week
postpartumvisit
OhioEpisode
Based
Payment
Model

Lowrisk
pregnancy
withlive
birth

280daysprior
todeliveryuntil
60dayspost
delivery

Motheronly
Exclusions:specific
clinicaland
businessexclusions

Relevantprenatalcareand
complications,delivery
care,andrelevantcareand
complicationsthroughthe
postpartumperiod,
includingreadmissions
relevanttotheepisode

Physician/group
deliveringthe
baby

FFSpayment
with
retrospective
reconciliation

Riskadjusted
reimbursement
perepisodefor
eachaccountable
provider
Adjustaverage
episodecostdown
basedonpresence
of70+clinicalrisk
factors

Exclusions:prenatal
medications

Paynegative
incentiveif
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ForReportingOnly:%
ofepisodeswith
gestationaldiabetes
screening,%of
episodeswithprenatal
hepatitisBscreening,

Episode
Definition

Episode
Timing

Patient
Population

Service
Inclusion/Exclusion

Accountable
Entity

PaymentFlow EpisodePrice
Removalofany
individualepisodes
thataremorethan
threestandard
deviationsabove
theriskadjusted
mean

Leveland
TypeofRisk

QualityMetrics

averagecosts
areabove
Acceptable
level

%ofepisodeswith
chlamydiascreening,
ultrasoundrate

Noimpactif
averagerisk
adjustedcosts
arebetween
Commendable
andAcceptable
levels
Incentive
paymentbased
onaverage
acrossall
episodes
withina12
month
performance
period

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Year1:qualitymetric
thresholdwillata
levelwhere75%of
providerspassall
metricstiedto
incentivepayments
AfterYear1:quality
metricthresholdwill
increasetotop
quartileperformance
overthenext5years

Patient
Engagement

Results

AppendixE:CoronaryArteryDiseaseBundledPaymentModels
ThisappendixpresentstheSummaryReviewofSelectedCABGandPCIInitiatives.Resultsreportedarebasedonstudiesofvaryingstatisticalrigorandextrapolatedfrompublications.
CABGBundled
Payment
Models

EpisodeDefinition/
Population

EpisodeTiming

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

LevelandType QualityMetrics
ofRisk

Patient
Engagement

Results

CMSBundled
Paymentsfor
Care
Improvement
(BPCI):Model
218

ElectiveandEmergent
CABG

Inpatientstay
through30,60,or
90dayspost
discharge

Allrelatedinpatientstay
costsinacutecareand
postacutecareandall
relatedservicesfor90
dayspostdischarge

Acutecare
hospital,physician
grouppractice,or
awardeeconvener

FFSwith
retrospective
reconciliation

Reconcileactual
costagainsta
bundled
payment
amountforthe
episodeofcare,
whichisbased
onhistoricalFFS
payments

Upsideand
downsiderisk

Noexplicitqualitytieto
paymentmethodology

NA

Resultsnotyetavailable

Reconcileactual
costagainsta
bundled
payment
amountforthe
episodeofcare,
whichisbased
onhistoricalFFS
payments

Upsideand
downsiderisk

Noexplicitqualitytieto
paymentmethodology

NA

Resultsnotyetavailable

Awardeesselect
episodelength

CMSBundled
Paymentsfor
Care
Improvement
(BPCI):Model
318

ElectiveandEmergent
CABG

Admissiontopost
acutecarewithin
30daysof
dischargethrough
30,60,or90days
aftertheinitiation
oftheepisode

Awardeesselect
episodelength

18

AllnonhospicePartA
andPartBservices
Providerfees(physician
andpostacutecare
services),related
readmissions,and
relatedPartBservices
(e.g.,lab,DME)

AllnonhospicePartA
andPartBservices
duringthepostacute
periodandreadmission

Voluntarygain
sharingwith
providers
FFSwith
Postacutecare
provider,provider retrospective
grouppractice,or
reconciliation
AwardeeConvener

Voluntarygain
sharingwith
providers

Increasing
upsideand
downsiderisk
overtimeto
stoplossand
stopgainlimits

Increasing
upsideand
downsiderisk
overtimeto
stoplossand
stopgainlimits

Model1notincludedasitisadiscountoffofIPPS,notaccountabilityacrossprovidersorsettings
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CABGBundled
Payment
Models

EpisodeDefinition/
Population

EpisodeTiming

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

LevelandType QualityMetrics
ofRisk

Patient
Engagement

Results

CMSBundled
Paymentsfor
Care
Improvement
(BPCI):Model
418

ElectiveandEmergent
CABG

Entireacutecare
hospitalstayand
related
readmissionsfor
30days

Allrelatedservices
providedbythe
hospital,physician,and
otherpractitioners

Acutecare
hospitalor
awardeeconvener

Prospective
payment

Singlebundled
paymentforall
relatedservices

Upsideand
downsiderisk

Noexplicitqualitytieto
paymentmethodology

NA

Resultsnotyetavailable

GeisingerHealth
System(GHS)
CABG
ProvenCare
Initiative

ElectiveCABG

Prospective
Payment

Setpricefor
episodeofcare.

Upsidereward

40+bestpracticeprocess
measures

Engage
patientswith
postdischarge
servicessuch
ashome
health
servicesand
cardiacrehab

Clinicaloutcomeimprovements
showadecreaseininhospital
mortality,patientswithany
complications(STS),atrial
fibrillation,permanentstroke,
prolongedventilation,re
intubation,intraopblood
productsused,reoperationfor
bleeding,deepsternalwound
infection,andpostopmeanLOS

Voluntarygain
sharingwith
providers
Procedurethrough
90dayspost
discharge

Preoperative
evaluation,allhospital
andprofessionalfees,
routinepostdischarge
care,andmanagement
ofrelatedcomplications
occurringwithin90days
ofprocedure

GHSfacilityorGHS
provider

Singlepayment
tothehospital
systemand
singlepayment
totheprovider
system
(paymenttothe
provider/surgeo
nisallocatedto
multipleservice
lines/providers
encounters)i.e.,
CABGsurgery,
anesthesiology,
cardiology

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Developeda
Patient
Compact

Hospital:Contributionmargin
increased17.6%,andtotal
inpatientprofitpercaseimproved
$1,946

HealthPlan:Paid4.8%lessper
caseforCABGwithProvenCare
thanitwouldhavewithout;paid
out28to36%lessforCABGwith
GHSthanwithotherproviders

CABGBundled
Payment
Models

EpisodeDefinition/
Population

EpisodeTiming

Service
Inclusion/Exclusion

Accountable
Entity

Payment
Flow

EpisodePrice

LevelandType QualityMetrics
ofRisk

Patient
Engagement

Results

PROMETHEUS/
HealthCare
Improvement
Initiative
Institute(HCI3)

ElectiveandEmergent
CABG

30dayspre
admissionthrough
180dayspost
discharge

Detailedlistsof
procedurecodesfor
inclusionofservices

Variesbasedon
theinitiative;can
beeitherthe
facility,the
practice,orboth

Canuseeither
prospectiveor
FFSwith
retrospective
reconciliation

Prospective:
Patientspecific
predicted
budgets,which
arenegotiated
upfrontduring
contracting

Contractscanbe
basedonupside
rewardonly,
upsideand
downsiderisk,
withorwithout
stoploss,and
withupside
rewardtiedto
quality
scorecards

Setofmeasuresevaluating
potentiallyavoidable
complications

NA

NA

Upsideand
downsiderisk

Averagelengthofpre
operativeinpatientstay

NA

Resultsnotyetavailable

Retrospective:
FFSpayment
allowsfor
severity
adjustment
basedonrisk
factorsto
budgetforper
patientcosts
ArkansasHealth
CarePayment
Improvement
Initiative

AcuteandNonacute
CABGProcedure

EmergencyCABG
excluded

Dateofsurgery
through30days
postdischarge
fromfacilitywhere
surgeryoccurred

Allrelatedinpatient,
outpatient,professional,
andpharmacyservices
happeningwithinthe
episodetimeframe

Physician
performingthe
CABG

FFSwith
retrospective
reconciliation

Exclusion:PCI
convertingtoCABG
within1day

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Averagecost
perepisodefor
each
accountable
provideris
comparedto
commendable
andacceptable
levels

Percentofpatientsadmitted
ondayofsurgery

Percentofpatientsfor
whomaninternalmammary
arteryisused

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AppendixF:ElectiveJointReplacementImplementationResources

GeneralResources:
CentersforMedicare& ThewebpagefortheBundledPaymentforCareImprovement(BPCI)
MedicaidServices(CMS) modelsincludesdetailsonepisodedefinitions,eligibleMSDRGs,andlists
BundledPaymentfor
ofparticipantsinthemodel.
CareImprovement
(BPCI)HomePage
IntegratedHealthcare
Association(IHA)
BundledPaymentsWeb
Page

TheIHAwebsiteoffersmultiplereportsandspecificationdocumentson
bundledpayments.

ArkansasHealthCare
ImprovementInitiative
PaymentReforms
Report

TheArkansasHealthCareImprovementInitiativereportdescribesthat
state'spaymentreforms,includingtheirepisodesofcarework.
Descriptionofthedesignandfindingsfromtheirinitiativeareincluded.
Medicaidandseveralinsurers,includingBlueCrossBlueShieldof
Arkansas,aredescribedindetail.

StateofTennessee
HealthCareInitiative
EpisodesofCare
Descriptionand
Examples

TheStateofTennesseeHealthCareInitiativewebsiteoffersdescriptions
ofepisodesofcareandexamplesofqualityandcostproviderreports.

HorizonBlueCrossBlue
ShieldinNewJersey

Payer
andProvider

RelationshipCaseStudy

TheHorizonBlueCrossBlueShieldinNewJerseycasestudyincludes
resultsandadescriptionoftheincentiverelationshipbetweenthepayer
andprovider.

PacificBusinessGroup
onHealth(PBGH)
EmployeeCenterof

ExcellenceNetwork

(ECEN)Summary

ThePacificBusinessGrouponHealthoffersanEmployersCenterof
ExcellenceNetworkinwhichcertainhospitalsandhealthsystemsare
designatedCentersofExcellence.Thesecentersagreetotakeabundled
paymentfortheepisode,andseverallargeemployersprovideincentives
toemployeeswhoneedthoseservicestoseekcarefromthecenters
providers.

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EpisodeDefinition:
HealthCareIncentives
ImprovementInstitutes
EvidenceBasedCase

RatesandDefinitions

TheHealthCareIncentivesImprovementInstitutewebsiteprovidesopen
sourcedefinitionsofvariousevidencebasedcaserates.Includesspecific
codesthatcanbeusedfordefiningthetriggereventandwhatservices
areincluded.

TheIntegratedHealthcareAssociationsdescriptionofdefinitionsofthe
IntegratedHealthcare

episodeoffersaprototypeusedbyseveralpayersandproviders,
Associations
Description

particularlyinCalifornia.
ofEpisodeDefinitions

CentersforMedicare&
MedicaidServices(CMS)
BundledPaymentfor
CareImprovement
(BPCI)Program
Presentation

ThisCMSpresentationontheBundledPaymentforCareImprovement
modelsincludesinformationonhowtodefineepisodesincludingdataon
episodecostsandpostacutecareusevariation.

CatalystforPayment

Reform(CPR)
Reporton

ImplementingTotalJoint
ReplacementEpisode
PaymentHowtoGuide

TheCatalystforPaymentReformreportonimplementingtotaljoint
replacementepisodepaymentisadownloadabledocumentthatincludes
aspreadsheetwithseveralexamplesofinclusionandexclusionlistsas
wellasguidanceonthestepsnecessary,includinginitialdataanalysis,
modelcontractlanguage,andstakeholderexpectations.

SharedDecisionMakingTools:
SharedDecisionMakingforTotal

JointReplacement:
ThePhysicians

Role

SharedDecisionMakingforTotalJointReplacement:The
PhysiciansRole,publishedbytheRheumatologyNetwork,
containsdescriptionofconsiderationsinshareddecision
makinganddeterminationsofwhentotaljointreplacement
ismosteffective.

ThisHealthAffairsarticlecitesevidenceoftheimpactof
Introducing
DecisionAids
atGroup

HealthwasLinkedtoSharplyLower
decisionaidsonthecostsanduseoftotaljointreplacement.

Hip
andKneeSurgeryRatesandCosts

DecisionAidLibraryInventory(DALI)

TheDALIwebsitecontainsaninventoryofdecisionaidtools
thatmeetthecriteriaoftheInternationalPatientDecision
AidStandards(IPDAS)Collaboration.Theinventoryisan
Excelspreadsheetthatprovidesthetreatmentareaandlinks
tothesponsoringorganization.

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PatientAssessmentTools:

KneeInjury
andOsteoarthritis
OutcomeScore(KOOS)

TheKOOSquestionnairewasdevelopedasaninstrumenttoassess
thepatientsopinionabouttheirkneeandassociatedproblems.
ThepsychometricpropertiesoftheKOOShavebeenassessedin
morethan20individualstudiesfromallovertheworld.KOOSis
widelyusedforresearchpurposesinclinicaltrials,largescale
databases,andregistries.KOOSisalsoextensivelyusedforclinical
purposes.Itconsistsof5subscales:pain,othersymptoms,
functionindailyliving,functioninsportandrecreation,andknee
relatedqualityoflife.

HOOSwasdevelopedasaninstrumenttoassessthepatients
Hip
DisabilityandOsteoarthritis
opinionabouttheirhipandassociatedproblems.HOOSis
OutcomeScore(HOOS)

intendedtobeusedforhipdisabilitywithorwithoutosteoarthritis
(OA).HOOSismeanttobeusedoverbothshortandlongtime
intervals;toassesschangesfromweektoweekinducedby
treatment(medication,operation,physicaltherapy)oroveryears
duetotheprimaryinjuryorposttraumaticOA.HOOSconsistsof5
subscales:pain,othersymptoms,functionindailyliving,function
insportandrecreation,andhiprelatedqualityoflife.
PatientReportedOutcome
MeasurementInformation

System(PROMIS)

PROMISinstrumentsusemodernmeasurementtheorytoassess
patientreportedhealthstatusforphysical,mental,andsocial
wellbeingtoreliablyandvalidlymeasurepatientreported
outcomes(PROs)forclinicalresearchandpractice.PROMIS
instrumentsmeasureconceptssuchaspain,fatigue,physical
function,depression,anxiety,andsocialfunction.Whilenot
specificallydesignedforoutcomesrelatedtohipandknee
replacement,itdoesincludeabroadersetofoutcomesthanthe
KOOSandHOOS,includingmentalfunctioningandqualityoflife.

VeteransRAND12ItemHealth
Survey(VR12)

The12ItemShortFormHealthSurvey(SF12)wasdevelopedfor
theMedicalOutcomesStudy,amultiyearstudyofpatientswith
chronicconditions.Thesequestionnaireshelpaninvestigatoror
cliniciangatherreliableinformationaboutpatienthealth,save
timeandmoneyinobtainingthisinformation,obtaininformation
thatcouldnototherwisebeobtained,determinetheeffectiveness
ofalternativetreatments,andassessthecourseofhealthover
time.A20Itemand36Itemsurveyisalsoavailable.

QualityMeasurement:
NationalQualityForum

TheNationalQualityForum(NQF)leadsnationalcollaborationto
improvehealthandhealthcarequalitythroughmeasurement,
primarilythroughmeasureendorsement.NQFoverseestheQuality
PositioningSystem,asearchabledatabaseofqualitymeasures.

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QualityMeasurement:
CMSMeasuresInventory

TheCMSMeasuresInventoryisacompilationofmeasuresusedby
CMSinvariousquality,reportingandpaymentprograms.The
Inventorylistseachmeasurebyprogram,reportingmeasure
specificationsincluding,butnotlimitedto,numerator,denominator,
exclusioncriteria,NationalQualityStrategy(NQS)domain,measure
type,andNationalQualityForum(NQF)endorsementstatus.

HospitalCompare

HospitalCompareoffersinformationaboutthequalityofcareatover
4,000Medicarecertifiedhospitalsacrossthecountry,including:

Hospitallevelriskstandardizedcomplicationrate(RSCR)following
electiveprimarytotalhiparthroplasty(THA)and/ortotalknee
arthroplasty(TKA)(NQF#1550)

Hospitallevel30dayallcauseriskstandardizedreadmissionrate
(RSRR)followingelectiveprimarytotalhiparthroplasty(THA)
and/ortotalkneearthroplasty(TKA)(NQF#1551)

CoreQualityMeasures

Collaborative(CQMC)

AmericasHealthInsurancePlans(AHIP),togetherwithCMSandthe
NQF,convenestheCoreQualityMeasuresCollaborative(CQMC),
whichiscomprisedofleadersfromhealthplans,physicianspecialty
societies,employersandconsumers.TheCQMCworkstodevelop
consensusdrivencoremeasuresetsacrossavarietyofclinicalareas,
includingorthopedics,withthegoalofharmonizingimplementation
acrossbothcommercialandgovernmentpayers,whichwill,inturn,
supportqualityimprovementefforts,reducethereportingburdenof
qualitymeasures,andofferconsumersactionableinformationfor
decisionmaking.

CMMIComprehensiveCare
forJointReplacement
Mode:QualityMeasures,
VoluntaryData,Public
ReportingProcessesfor
PreviewReports

Thisdocumentincludesinformationonariskadjustedsetoftotaljoint
replacementoutcomemeasuresthatarebeingusedbyCMSand
providersaspartoftheCJRprogram.

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AppendixG:MaternityCareImplementationResources

ExistingInitiatives
StateofTennesseeHealth
CareInitiative

Episodesof
Care
DescriptionandExamples

ArkansasHealthCare
ImprovementInitiative

PaymentReformReport

CommunityHealthChoice
MaternityandNewborn
CareBundledPayment

Pilot

TheStateofTennesseeHealthCareInitiativewebsiteoffers
descriptionsofdifferentepisodesofcareandexamplesofqualityand
costreportingfromproviders.

TheArkansasHealthCareImprovementInitiativereportdescribesthe
statespaymentreforms,includingitsepisodepaymentwork.
Descriptionoftheepisodedesignandfindingsfromitsinitiativeare
included.TherolesofMedicaidandseveralinsurers,includingBlue
CrossBlueShieldofArkansas,aredescribedindetail.
CommunityHealthChoicespilotincludesboththemotherand
newbornintheepisodeofcareandusesablendedcesareanand
vaginaldeliverypaymentrate.

ProvidenceHealths

PregnancyCarePackage

ProvidenceHealthsPregnancyCarePackageusesabundledpayment
modelthatincludestheuseofcertifiednursemidwives,patient
navigators,anddoulasonthecareteam.

Geisingers
Perinatal
ProvenCareInitiative

GeisingerusestheProvenCaremodeltoprovideaglobalpaymentfor
theperinatalepisodeandallowsproviderstoshareinsavings.

PacificBusinessGroupon
Health(PBGH)

ThePacificBusinessGrouponHealthdesignedapilotprogramto
reducelowrisk,firsttimecesareandeliveriesandimplementedthis
programacrossthreeSouthernCaliforniaHospitals.

MaternityPaymentand
CareRedesignPilotCase
Study

Baby+Company

Baby+Companyisabirthcentermodelthatprovidesenhancedprenatal
careandeducationtoreducetherateofcesareandeliveries,andshows
significantsavingsincostforbothvaginalandcesareandeliveries.The
Baby+Companywebsiteoffersadditionaldetailsaboutthebirthcenter.

TheMinnesotaBirth

CentersBirthBundleTM

TheMinnesotaBirthCentersBirthBundleTMprovidescostsavingsby
offeringasingle,globalfeeformaternitycare.Itusescertifiednurse
midwiveswhocollaboratewithOBphysicianstoprovidecoordinated
clinicalcarethroughoutthepregnancy,delivery,andpostpartum
period.

OhioHealth
Transformation

TheOhioGovernorsOfficeofHealthTransformationwebsiteoffers
informationonitsimplementationofepisodebasedpaymentmodels.

EpisodeBasedPayment
Model

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GeneralResources:
IntegratedHealthcare

Associations
Description
of
MaternityandWomens
HealthEpisodeDefinitions

TheIntegratedHealthcareAssociationsdescriptionoftheMaternity
andWomensHealthEpisodesdefinitionsoffersaprototypeusedby
severalpayersandproviders,particularlyinCalifornia.

HealthCareIncentives

ImprovementInstitutes

(HCI3)
EvidenceBasedCase
RatesandDefinitions

TheHealthCareIncentivesImprovementInstitute(HCI3)website
providesopensourcedefinitionsofvariousevidencebasedcase
rates.Includesspecificcodesthatcanbeusedfordefiningthe
episodestartingpointandwhatservicesareincluded.

CatalystforPayment

Reform(CPR)
Maternity

CarePayment
ActionBrief

TheCatalystforPaymentReformissuebriefonmaternitycare
paymentdiscusseschallengeswithmaternitypaymentreform,offers
advicetopurchasers,anddefinesblendedpaymentfordelivery.

CenterforHealthcare

Quality
&PaymentReform

(CHQPR)

TheCHQPRwebsiteoffersvariouspublicationsandreportsdetailing
suggestionsforpaymentreform.

Overdue:Medicaidand

PrivateInsuranceCoverage
ofDoulaCaretoStrengthen
MaternalandInfantHealth

TheNationalPartnershipforWomen&Families,Childbirth
Connection,andChoicesinChildbirthworkedtogetheronthisissue
brief,whichprovidesadditionaldetailsonhowdoulaservicescanbe
incorporatedintoaperinatalepisodeofcaretohelpreducethecost
ofanepisode.

AmericanAssociationof

BirthCenters(AABC)

TheAABCwebsiteprovidescomprehensiveinformationontheroleof
birthcentersinmaternitycare,includingaproposalrelatedtousing
alternativepaymentmodelsformaternitycare.

NationalAssociationof
CertifiedProfessional
Midwives(NACPM)

TheNACPMoffersaproposaltoaddressthedefinitionoftheeligible
population,threepaymentmodels,qualitymetrics,anddata
collectionformaternitybundles.

BundledPaymentProposal

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PatientEngagement:
ChildbirthConnection

Resultsfromanationalsurveyofwomenschildbearingexperiences.

Listening
toMothersIII:
PregnancyandBirth

Childbirth
Connection

Resultsfromanationalsurveyofwomenschildbearingexperiences.

Listening
toMothersIII:

NewMothersSpeakOut

SupportforHealthy

BreastfeedingMothers
andHealthyTermBabies

TheCochraneLibraryprovidesadiscussionontheeffectivenessof
encouragingearlyandongoingsupportforbreastfeeding.

USOpenNotesInitiative

Thisinitiativeallowspatientstoaccesstheirprovidersclinicalnotes
online.

MaternityNeighborhood

Toolsavailableonlinetohelpconnectwomenwiththeirproviders
duringtheirperinatalepisodes.

StrongStartInitiative

Resultsfrombothyear1andyear2oftheStrongStartforMothersand
NewbornsInitiative.

Year 1 AnnualReport
Year2AnnualReport
CenteringPregnancy

ThiswebsiteoffersadditionalinformationonCenteringPregnancys
groupcareandeducation.

InformedMedical
DecisionsFoundation

HealthWiseResearchandAdvocacyprovidesinformationforpatients
toparticipateinashareddecisionmakingprocessoftheirhealthcare.

PatientDecisionAids

Anonlineinventoryofdecisionaidsbytopicthathavebeenrated
accordingtointernationalstandards.

QualityMeasurement:
CoreQualityMeasure
Collaborative(CQMC)

AmericasHealthInsurancePlans(AHIP),togetherwithCMSandthe
NQF,convenestheCoreQualityMeasuresCollaborative(CQMC),
whichiscomprisedofleadersfromhealthplans,physicianspecialty
societies,employers,andconsumers.TheCQMCworkstodevelop
consensusdrivencoremeasuresetsacrossavarietyofclinicalareas,
includingorthopedics,withthegoalofharmonizingimplementation
acrossbothcommercialandgovernmentpayers.This,inturn,will
supportqualityimprovementefforts,reducethereportingburdenof
qualitymeasures,andofferconsumersactionableinformationfor
decisionmaking.

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QualityMeasurement:
NationalQualityForum

TheNationalQualityForum(NQF)leadsanationalcollaborationto
improvehealthandhealthcarequalitythroughmeasurement,
primarilythroughmeasureendorsement.NQFoverseestheQuality
PositioningSystem,asearchabledatabaseofqualitymeasures.

CMSMeasuresInventory

TheCMSMeasuresInventoryisacompilationofmeasuresusedby
CMSinvariousquality,reporting,andpaymentprograms.The
Inventorylistseachmeasurebyprogram,reportingmeasure
specificationsincluding,butnotlimitedto,numerator,denominator,
exclusioncriteria,NationalQualityStrategy(NQS)domain,measure
type,andNationalQualityForum(NQF)endorsementstatus.

HealthyPeople2020

ThiswebsiteprovidesinformationonvariousHealthPeoplequality
initiativesformaternal,infant,andchildhealth.

AmericanCongressof
Obstetriciansand
Gynecologists(ACOG)

ACOGprovidesguidelinesthataddressareaswherequality
improvementinitiativesmayprovidepositiveoutcomesforthe
motherandinfantduringaperinatalepisode.

QualityImprovementin
MaternityCare
CentersforMedicare&
MedicaidServices(CMS)

ThisCMSwebsiteprovideslinkstovariousdataandmeasurement
materialrelatedtomaternalandinfantcare.

MaternalandInfantHealth
CareQuality
BetterMeasurement of
MaternityCareQuality

ThisblogbyHealthAffairsdiscussesvariationsinratesofobstetrical
complicationsacrossthenationandoffersstepsthatmayhelp
cliniciansbecomemoreawareofqualitymeasures.

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AppendixH:CoronaryArteryDiseaseImplementationResources
ExistingInitiatives
CentersforMedicare&
MedicaidServices(CMS)
BundledPaymentforCare
Improvement(BPCI)Home
Page

ThewebpagefortheBundledPaymentforCareImprovement(BPCI)
modelsincludesdetailsonepisodedefinitions,eligibleMSDRGs,and
listsofparticipantsinthemodel.

BlueCrossBlueShieldof
Texas

BlueCrossBlueShieldofTexascreatedaBlueCareConnectionprogram
foritsmemberstobettercontrolchronicconditions.

NewYorkStateDelivery
SystemReformIncentive
Payment(NYEDSRIP
Program)

TheNewYorkStateDeliverySystemReformIncentivePayment
Programisoneexampleofaframeworkthatpaysfromthecondition
perspectiveinsteadofbyprocedure.

GeisingersProvenCare
Initiative

GeisingerusestheProvenCaremodeltoprovideaglobalpaymentfor
PCIandCABGproceduresandallowsproviderstoshareinsavings.

HealthCareIncentives
ImprovementInstitutes
EvidenceBasedCaseRates
andDefinitions

TheHealthCareIncentivesImprovementInstitutewebsiteprovides
opensourcedefinitionsofvariousevidencebasedcaserates.This
includesspecificcodesthatcanbeusedfordefiningthetriggerevent
andwhatservicesareincluded.

StateofTennesseeHealth
CareInitiative

TheStateofTennesseeHealthCareInitiativewebsiteoffers
descriptionsofepisodeofcareandexamplesofqualityandcost
providerreports.

EpisodeofCare
DescriptionandExamples
OhioHealth
Transformation
EpisodeBasedPayment
Model
ArkansasHealthCare
ImprovementInitiative
PaymentReformReport

TheOhioGovernorsOfficeofHealthTransformationwebsiteoffers
informationontheirimplementationofepisodebasedpayment
models.

TheArkansasHealthCareImprovementInitiativereportdescribesthe
statespaymentreforms,includingtheirepisodepaymentwork.
Descriptionofthedesignandfindingsfromtheirinitiativeareincluded.
TherolesofMedicaidandseveralinsurers,includingBlueCrossBlue
ShieldofArkansas,aredescribedindetail.

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GeneralResources
ConvenerOrganizations

ExamplesofconvenerorganizationsincludePremier,Inc.,which
primarilyworkswithhospitals,andCogentHealthcare,whichmanages
hospitalistpractices.

HealthCareSystem
FederalLaws

ThisresourceguideprovidesfurtherinformationontheAntiKickback
StatuteandTheCivilMonetaryPenaltiesLaw.Furtherinformationon
theSelfReferralLawcanbefoundhere.

CMSAcuteCareEpisode
(ACE)Demonstration

Thisbundledpaymentapproachincludes28cardiacand9orthopedic
inpatientsurgicalservicesandprocedures.

PhysicianEngagement
TheInformedMedical
DecisionsFoundations
PatientVisitGuide

TheInformedMedicalDecisionsFoundationprovidesaPatientVisit
Guidetohelppatientsaskquestionsandworkwiththeirdoctorsto
makefullyinformeddecisionsregardingtheirhealthcare.

AgencyforHealthcare
ResearchandQuality
(AHRQ)EffectiveHealth
CareProgram

AHRQsEffectiveHealthCareProgramprovidesadditionalresourcesfor
patientstounderstandtheirconditionandstarttheconversationwith
theirproviderregardingtreatmentoptions.

DecisionAidLibrary
Inventory(DALI)

TheDALIwebsitecontainsaninventoryofdecisionaidtoolsthatmeet
thecriteriaoftheInternationalPatientDecisionAidStandards(IPDAS)
Collaboration.TheinventoryisanExcelspreadsheetthatprovidesthe
treatmentareaandlinkstothesponsoringorganization.

CardiovascularDisease
RiskCalculator

Thisriskassessmenttoolpredictsapatientsriskofhavingaheart
attackinthenexttenyears.

NewcastleHospitalPatient NewcastleHospitalssectiononshareddecisionmakingprovidesa
shortvideo,fromtheMAGICProgramme,onthethreemostimportant
andVisitorGuides
questionstoaskyourhealthcareproviderwhenmakingadecision.This
sectionalsoprovidesmoreinformationontheneedforpatientstobe
involvedindecisionsabouttheirhealthcare.
HealthConsumerAlliance

TheHealthConsumerAlliancehasdevelopedawebsitethatlinksto
variousconsumerbrochureswhichanswerfrequenthealthcare
questions,includingtheKnowYourRightsFactSheet.

JointCommissionsSpeak
UpTMProgram

BrochuresandvideosareavailableonTheJointCommissionswebsite
asapartoftheirnationalpatientsafetycampaigncalledSpeakUpTM.

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PhysicianEngagement
MayoClinicStudy
CardiacRehabilitation
mobileapp
SMARTCarePilot

TheMayoClinicstudiedtheeffectofusingamobileapptohelp
encouragecardiacrehabilitationforpatientswhorecentlysufferedan
episodeofacutecoronarysyndrome.
Thispilotproject,developedbytheFloridaandWisconsinchaptersof
theAmericanCollegeofCardiologyaimstoimprovequalityofcare,
enhanceaccesstocare,andreducehealthcarecostsbyprovidingtools
tohelpphysiciansandcardiovascularteammembersapplyguidelines
andappropriateusecriteria(AUC)atthepointofcare.

PatientReportedOutcome PROMISinstrumentsusemodernmeasurementtheorytoassess
MeasurementInformation patientreportedhealthstatusforphysical,mental,andsocialwell
beingtoreliablyandvalidlymeasurepatientreportedoutcomes(PROs)
System(PROMIS)
forclinicalresearchandpractice.PROMISinstrumentsmeasure
conceptssuchaspain,fatigue,physicalfunction,depression,anxiety,
andsocialfunction.

CareTransitions
AcuteCareforElders(ACE) TheUniversityHospitalsCaseMedicalCenterdevelopedtheAcuteCare
forEldersmodelofcaretoassistwiththetransitionfromaninpatient
Program
admissiontohomeforelderlypatients.
CareTransitions Coaching
Program

AprogramattheUniversityofColoradowhichusesTransition
Coachestoteachskillstopatientsandcaregiverstopromoteand
supportcontinuityofcare.

H2HHospitaltoHome
QualityInitiative

TheAmericanCollegeofCardiology(ACC)andtheInstitutefor
HealthcareImprovement(IHI)createdthisinitiativetoprovide
resourcesforthetransitionofthepatientfromthehospitaltothe
patientshome

QualityMeasurement
AmericanCollegeof
Cardiology(ACC)
AppropriateUseCriteria
andTreatmentGuidelines

ThiswebsiteprovidesadditionalinformationaboutTheAmerican
CollegeofCardiologysAppropriateUseCriteriaandTreatment
Guidelines.

SocietyofThoracic
SurgeonsQuality
PerformanceMeasures

Thiswebsiteliststhecardiacrelatedqualitymeasuresthatare
developedandmaintainedbytheSocietyofThoracicSurgeons.

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QualityMeasurement
CoreQualityMeasures
Collaborative(CQMC)

TheCoreQualityMeasuresCollaborativecreatedaConsensusCoreSet
forCardiovascularMeasures.

NationalQualityForum

TheNationalQualityForum(NQF)leadsnationalcollaborationto
improvehealthandhealthcarequalitythroughmeasurement,primarily
throughmeasureendorsement.NQFoverseestheQualityPositioning
System,asearchabledatabaseofqualitymeasures.

CMSMeasuresInventory

TheCMSMeasuresInventoryisacompilationofmeasuresusedbyCMS
invariousquality,reporting,andpaymentprograms.Theinventorylists
eachmeasurebyprogram,reportingmeasurespecificationsincluding,
butnotlimitedto,numerator,denominator,exclusioncriteria,National
QualityStrategy(NQS)domain,measuretype,andNationalQuality
Forum(NQF)endorsementstatus.

HospitalCompare

HospitalCompareoffersinformationaboutthequalityofcareatover
4,000Medicarecertifiedhospitalsacrossthecountry.

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AppendixI:LANRelatedContent
InadditiontotheCEPWorkGroup,theLANGuidingCommitteeconvenedtwoadditionalWorkGroups
thatproducedcontentrelevanttomanyreadersofthisWhitePaper.
TheAlternativePaymentModel(APM)FrameworkandProgressTrackingWorkGroupproducedthe
AlternativePaymentModelFramework,whichdescribesfourcategoriesofalternativepaymentmodels.
ThePopulationBasedPaymentWorkGroupdevelopedrecommendationsfortheimplementationof
populationbasedpayment,withafocusonfourpriorityareas:financialbenchmarking,patient
attribution,performancemeasurement,anddatasharing.
ThesepriorityareasshouldbeconsideredasawholeforeffectivePBPimplementationastheyinteract
considerably.Forexample,todeterminethefinancialbenchmark,itiscriticaltoknowpreciselywhich
patientsarebeingattributedtothePBPmodel.Further,mostPBPinitiativeswillrequireperformance
oncertainmeasuresinconsideringwhethertheaccountableentityhasmetthebenchmark.Data
sharingiscriticalfortheproviderstoeffectivelytargettheirefforts,forpayersandpurchasersto
monitorperformanceandforpatientstobeempoweredtobeactiveintheircare.
ThefollowingprovideslinksandabriefoverviewofeachofthepaperswrittenbytheAPMandPBP
WorkGroups.Theseproductsofferreadersofthispaperadditionalresourcestosupportdecision
makingonAPMdesignandimplementation.Visitourwebsite(https://www.hcplan.org)foranupto
datelistofLANworkproductsandforaglossaryofterms.

TheAlternativePaymentModelFrameworkWhitePaper
TheAPMFrameworkWhitePaperdefinespaymentmodelcategoriesandestablishesacommon
frameworkandasetofconventionsformeasuringprogressintheadoptionofAPMs,whichare
methodsofrewardinghealthcareprovidersbasedonthequalityandcoordinationofthecarethey
provide.Providersareencouragedtomovetocategoriesthatoffergreaterqualityandvalue.Asthey
do,theywillexperienceincreasedaccountabilityforbothqualityofcareandtotalcostofcare,witha
greaterfocusonpopulationhealthmanagement(asopposedtopaymentforspecificservices).

AcceleratingandAligningPopulationBasedPayment:FinancialBenchmarking
TheFinancialBenchmarkingWhitePaperdescribesapproachesforsettinganinitialbenchmarkand
updatesovertimeandalsoaddressesriskadjustmentconsiderations.TheWhitePaperdiscussesthe
needtobalancevoluntaryparticipationwiththemovementtowardconvergenceinamarketwith
providersatdifferentstartingpoints.

AcceleratingandAligningPopulationBasedPayment:PatientAttribution
ThePatientAttributionWhitePaperdescribesthemethodbywhichpatientpopulationsareassignedto
providerswhoareaccountablefortotalcostofcareandqualityoutcomesfortheirdesignated
populationsinaPBPmodel.Thepaperrecommendsthatactive,intentionalidentificationorself
reportingbypatientsshouldbeconsideredfirst.Thepaperalsooutlinesnineadditional
recommendationsthatpayersandproviderscanusewhenmakingdecisionsonattributionintheirPBP
models.

AcceleratingandAligningPopulationBasedPayment:PerformanceMeasurement
ThePerformanceMeasurementWhitePaperoffersbothshorttermactionrecommendationsanda
longertermvisionforacceleratingalignmentaroundAPMs.Thepaperoffersawayforwardthatcould
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leadtoradicalchangeinhowperformanceismeasuredacrosstheboardinordertoenableeffective
populationbasedpayments.TheWhitePaperdescribeshowtoevolvefromgranularmeasurement
systemsofthefullcontinuumofcare,whichfocusonnarrowandspecificcareprocesses,tomore
macrolevelmeasurementsystemsorientedonoutcomes.Thepaperalsomakesstrong
recommendationsforimmediateactionstepsbydescribingfourkeyperformancemeasurement
principlesandsevenrecommendationsforbuildingandsustainingaperformancemeasurementsystem
thatsupportsandencouragescollaborationamongstakeholders.

AcceleratingandAligningPopulationBasedPayment:DataSharing
TheDataSharingWhitePaperoffersseveralguidingprinciplesandrecommendationsthathighlightthe
futuredevelopmentofdatasharingarrangementsinPBPmodels.ThepaperalsooutlinesUseCasesfor
datasharingwhichdescribeparticulartypesofdatasharingarrangements,inboththeircurrentand
aspirationalstates.Thegoalistocreateanenvironmentwheredatafollowsthepatientandisavailable
tostakeholders(patients,providers,purchasers,andpayers)inatimelymanner.

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AppendixJ:PrinciplesforPatientandFamilyCenteredPayment
Thefollowingprinciples,producedbytheLANsConsumerandPatientAffinityGroup,areintendedto
helpguidethedevelopmentofnewpaymentstrategies.Theyprovideguidanceandaspirational
directiontoensurethatweaddresstheneedsandprioritiesofpatientsandfamiliesaswetransitionto
valuebasedpayment.Theprinciplesrestontheconvictionthatconsumers,patients,andfamiliesare
essentialpartnersineveryaspectoftransforminghealthcareandimprovinghealth.
Consumers,patients,familiesandtheiradvocatesshouldbecollaborativelyengagedinallaspectsof
design,implementation,andevaluationofpaymentandcaremodels,andtheyshouldbeengagedas
partnersintheirowncare.
Thecollaborationindesignofpaymentandcaremodelsshouldincludeoversight,governance,and
interfacewiththecommunitieswherecareisdelivered.Atthepointofcare,patientsandfamilies
shouldbeengagedinwaysthatmatchtheirneeds,capacitiesandpreferences.Collaborativecareshould
bealignedwithpatientgoals,valuesandpreferences(includinglanguage),andshouldreflectshared
careplanninganddecisionmakingthroughoutthecarecontinuum.
Positiveimpactonpatientcareandhealthshouldbeparamount.
Thecentralconsiderationinallpaymentdesignshouldbeimprovingpatienthealthoutcomes,
experienceofcare,andhealthequity,whilealsoensuringthemosteffectiveuseofhealthcare
resources.
Measuresofperformanceandimpactshouldbemeaningful,actionable,andtransparentto
consumers,patientsandfamilycaregivers.
Newpaymentmodelsshouldbeassessedusingmeasuresthataremeaningfultopatientsandfamilies.
Theyshouldprioritizetheuseofmeasuresderivedfrompatientgenerateddatathataddressbothcare
experienceandoutcomes.Measuresshouldalsoaddressthefullspectrumofcare,carecontinuityand
overallperformanceofspecificmodels.Measuresshouldbegranularenoughtoenablepatientstomake
informeddecisionsaboutprovidersandtreatments.
Primarycareservicesarefoundationalandmustbeeffectivelycoordinatedwithallotheraspectsof
care.
Paymentmodelsshouldfosterthiscoordination,particularlybetweenprimaryandspecialtycare,in
ordertopromote:optimalcoordination,communicationandcontinuityofcare;trustedrelationships
betweencliniciansandpatients/families;concordancewithpatientgoals,valuesandpreferences;
integrationofnonclinicalfactorsandcommunitysupports;andcoordinationofservicesdelivered
throughnontraditionalsettingsandmodalitiesthatmeetpatientneeds.Effectivedeliveryand
coordinationofprimarycareservicesshouldpromotebettercareexperience,optimalpatient
engagement,betterhealthoutcomes,andincreasedhealthequity.
Healthequityandcareforhighneedpopulationsmustbeimproved.
Newpaymentmodelsshouldfosterhealthequity,includingaccesstoinnovativeapproachestocareand
preventinganydiscriminationincare.Theyshouldcollectdatathatallowsforassessmentofdifferential
impactsandtheidentificationandredressofdisparitiesinhealth,healthoutcomes,careexperience,
access,andaffordability.
Patientandfamilyengagementandactivationshouldbesupportedbytechnology.
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Newpaymentmodelsshouldpromoteuseofinformationtechnologythatenablespatientsandtheir
designatedcaregiverstoeasilyaccesstheirhealthinformationinameaningfulformatthatenablesthem
tousetheinformationtobettermanageandcoordinatetheircare.Thetechnologyshouldalsoenable
patientstocontributeinformationandcommunicatewiththeirproviders,anditshouldfosterpatient
clinicianpartnershipinongoingmonitoringandmanagementofhealthandcare.
Financialincentivesusedinallmodelsshouldbetransparentandpromotebetterqualityaswellas
lowercosts.
Financialincentivesforprovidersandpatientsshouldbefullydisclosedsothatpatientsandconsumers
understandhownewpaymentapproachesdifferfromtraditionalfeeforservicemodels,andhow
certainincentivesmayimpactthecareprovidersrecommendorprovide.Financialincentivesshouldbe
developedinpartnershipwithpatientsandconsumersinordertoreflecthowpatientsdefinevalue,and
toreducefinancialbarrierstoneededcareandensurethatpatientsarenotsteeredtolowercostcare
withoutregardforquality.

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AppendixK:Resources
AgencyforHealthcareResearchandQuality.(2003).HCUPNet,HealthcareCost&UtilizationProject.
ComplicationsofPregnancy,Childbirth,andthePuerperium.Retrievedfrom
http://hcupnet.ahrq.gov/
AgencyforHealthcareResearchandQuality.(2011).HCUPFactsandFigures:StatisticsonHospital
basedCareintheUnitedStates,2009.Retrievedfromhttp://www.hcup
us.ahrq.gov/reports/factsandfigures/2009/pdfs/FF_report_2009.pdf
AgencyforHealthcareResearchandQuality.(2013).HCUPNet,HealthcareCost&UtilizationProject.
CertainConditionsOriginatinginthePerinatalPeriod.Retrievedfromhttp://hcupnet.ahrq.gov/.
AgencyforHealthcareResearchandQuality.(2016).CAHPSSurveysandGuidance.Retrievedfrom
http://www.ahrq.gov/cahps/SurveysGuidance/index.html
AHIPCoverage.(2016).AHIP,collaborativepartnersannouncecoresetofqualitymeasures[Press
release].Retrievedfromhttp://www.ahipcoverage.com/2016/02/16/ahipcollaborative
partnersannouncecoresetofqualitymeasures/
AmericanAcademyofPediatrics,Riley,L.,&Stark,A.R.(2013).Guidelinesforperinatalcare.American
AcademyofPediatrics.
AmericanCollegeofObstetriciansandGynecologists.(2014).Safepreventionoftheprimarycesarean
delivery.Retrievedfromhttps://www.acog.org//media/ObstetricCare
Consensus%20Series/oc001.pdf
Bell,S.K.,Mejilla,R.,Anselmo,M.,Darer,J.D.,Elmore,J.G.,Leveille,S.,...&Walker,J.(2016).When
doctorssharevisitnoteswithpatients:astudyofpatientanddoctorperceptionsof
documentationerrors,safetyopportunitiesandthepatientdoctorrelationship.BMJquality&
safety,bmjqs2015.
BlueCrossBlueShieldAssociation&BlueHealthIntelligence.(2015).Astudyofcostvariationsforknee
andhipreplacementsurgeriesintheU.S.Retrievedfrom
http://www.bcbs.com/healthofamerica/BCBS_BHI_ReportJan_21_Final.pdfDepartmentof
Research&ScientificAffairs,AmericanAcademyofOrthopaedicSurgeons.(2014).Annual
incidenceofcommonmusculoskeletalproceduresandtreatment.Retrievedfrom
http://www.aaos.org/research/stats/CommonProceduresTreatmentsMarch2014.pdf
CenteringHealthcareInstitute.(n.d.).CenteringPregnancy.Retrievedfrom
https://www.centeringhealthcare.org/whatwedo/centeringpregnancy
CentersforDiseaseControlandPrevention&HealthResourcesandServicesAdministration.(2012).
Maternal,Infant,andChildHealthChapter16[Figure162].Retrievedfrom
http://www.cdc.gov/nchs/data/hpdata2010/hp2010_final_review_focus_area_16.pdf
CentersforDiseaseControlandPrevention.(2016,January21).PregnancyMortalitySurveillance
System.Retrievedfrom
http://www.cdc.gov/reproductivehealth/maternalinfanthealth/pmss.html
CentersforMedicareandMedicaid.(2015a).ConsensusOB/GYNMeasuresVersion1.0.Retrievedfrom
https://www.cms.gov/Medicare/QualityInitiativesPatientAssessment
Instruments/QualityMeasures/Downloads/OBGYNMeasures.pdf

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CentersforMedicareandMedicaid.(2015b).FraudandAbuseWaivers.Retrievedfrom
https://www.cms.gov/Medicare/FraudandAbuse/PhysicianSelfReferral/FraudandAbuse
Waivers.html
Cheyney,M.,Bovbjerg,M.,Everson,C.,Gordon,W.,Hannibal,D.,&Vedam,S.(2014).Outcomesofcare
for16,924plannedhomebirthsintheUnitedStates:TheMidwivesAllianceofNorthAmerica
StatisticsProject,2004to2009.JournalofMidwifery&WomensHealth,59(1),1727.
DeclercqE.R.,SakalaC.,CorryM.P.,ApplebaumS.,&HerrlichA.(2013).ListeningtoMothersSMIII:
PregnancyandBirth.Retrievedfromhttp://transform.childbirthconnection.org/wp
content/uploads/2013/06/LTMIII_PregnancyandBirth.pdf
ECRsanddefinitions:HCI3evidenceinformedcaserate(ECR)definitions.Retrievedfrom
http://www.hci3.org/programsefforts/prometheus
payment/evidence_informed_case_rates/ecrsanddefinitions
Esch,T.,Mejilla,R.,Anselmo,M.,Podtschaske,B.,Delbanco,T.,&Walker,J.(2016).Engagingpatients
throughopennotes:anevaluationusingmixedmethods.BMJopen,6(1),e010034.
Ghomrawi,H.M.,Schackman,B.R.,&Mushlin,A.I.(2012).Appropriatenesscriteriaandelective
procedurestotaljointarthroplasty.NewEnglandJournalofMedicine,367(26),24672469.doi:
10.1056/NEJMp1209998
Haelle,T.(2016,April13).YourBiggestCSectionRiskMaybeYourHospital.ConsumerReports.
Retrievedfromhttp://www.consumerreports.org/doctorshospitals/yourbiggestcsectionrisk
maybeyourhospital/
Hamilton,B.E.,Martin,J.A.,Osterman,M.J.,Curtin,S.C.,&Matthews,T.J.(2015).Births:FinalData
for2014.NationalVitalStatisticsReports,64(12),164.
HealthManagementAssociates.(2007).MidwiferyLicensureandDisciplinePrograminWashington
State:EconomicCostsandBenefits.Retrievedfrom
http://www.washingtonmidwives.org/assets/Midwifery_Cost_Study_103107.pdf
Hill,I.,Benatar,S.,Courtot,B.,Blavin,F.,&Wilkinson,M.(2016).StrongStartforMothersand
NewbornsEvaluation,Year2AnnualReport,March2016.Retrievedfrom
https://downloads.cms.gov/files/cmmi/strongstartenhancedprenatalcare_evalrptyr2v2.pdf
Hodnett,E.D.,Gates,S.,Hofmeyr,G.J.,&Sakala,C.(2013).Continuoussupportforwomenduring
childbirth.TheCochraneLibrary.
Hornbrook,M.C.,Hurtado,A.V.,&Johnson,R.E.(1985).Healthcareepisodes:Definition,measurement
anduse.MedicalCareResearchandReview,42(2),163218.
Howell,E.,Palmer,A.,Benatar,S.,&Garrett,B.(2014).PotentialMedicaidcostsavingsfrommaternity
carebasedatafreestandingbirthcenter.Medicare&Medicaidresearchreview,4(3).
Johantgen,M.,Fountain,L.,Zangaro,G.,Newhouse,R.,StanikHutt,J.,&White,K.(2012).Comparison
oflaboranddeliverycareprovidedbycertifiednursemidwivesandphysicians:Asystematic
review,1990to2008.Women'sHealthIssues,22(1),e73e81.
KaiserFamilyFoundation.(n.d.).BirthsFinancedbyMedicaidTimeframe:2010.Retrievedfrom
http://kff.org/medicaid/stateindicator/birthsfinancedbymedicaid/
MacDorman,M.F.,Matthews,T.J.,&Declercq,E.(2014).TrendsinoutofhospitalbirthsintheUnited
States,19902012.NCHSdatabrief,(144),18.
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Main,E.K.,Morton,C.H.,Hopkins,D.,Giuliani,G.,Melsop,K.,&Gould,J.B.(2011).Cesareandeliveries,
outcomes,andopportunitiesforchangeinCalifornia:towardapublicagendaformaternitycare
safetyandquality.Retrievedfrom
https://www.researchgate.net/profile/Christine_Morton2/publication/243963305_Cesarean_D
eliveries_Outcomes_and_Opportunities_for_Change_in_California_Toward_a_Public_Agenda_f
or_Maternity_Care_Safety_and_Quality/links/0c96051d21831c624b000000.pdf
MaternityNeighborhood(n.d.).Ourproductstoolsforhighqualitymaternitycare.Retrievedfrom
http://maternityneighborhood.com/products/
Matthews,T.J.&MacDormanM.F.(2013).InfantMortalityStatisticsfromthe2010PeriodLinked
Birth/InfantDeathDataSet.NationalVitalStatisticsReports,62(8),127.
MedicareProgram;ComprehensiveCareforJointReplacementPaymentModelforAcuteCareHospitals
FurnishingLowerExtremityJointReplacementServices,80Fed.Reg.73274(proposedNov.24,
2015)(tobecodifiedat42C.F.R.pt.510)
NationalPartnershipforWomen&Families.(2016).Overdue:MedicaidandPrivateInsuranceCoverage
ofDoulaCaretoStrengthenMaternalandInfantHealth.Retrievedfrom
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