New Marketplace

Developing a Playbook for IPU-based Surgical Care and New Payment Models

Article · July 17, 2019

Conventional wisdom is that doctors — and especially surgeons — do not want to bundle health care. Under the right circumstances in support of surgical excellence, the American College of Surgeons (ACS) supports team-based care and alternative payment systems that appropriately measure quality and value and assign bundled payments.

For more than half a century, surgeons have operated by implementing the principles of team-based care in surgical disciplines such as trauma care or cancer care. Yet, payment remains in silos, purchasing clinical services using fee-for-service payment from each of the team member’s contributions along the care continuum. Fee-for-service seems rational when care models are very limited in time and scope and only a few clinical services apply to the care model. But some aspects of surgical care models have gotten far more complex. Patients have multiple comorbid conditions that require optimization prior to a surgical procedure and involve even more complexity during and after the facility-based aspects of surgical care. Skilled nursing, rehabilitation medicine, and home health care are now common elements in complex, team-based surgical care models. Combining all the elements of care into integrated practice units defines the opportunity for team-based, episode payment in bundles.

Recent efforts led by the federal government, some of the major payers, and large, self-insured employers have focused efforts on alternative means for purchasing clinical care. The American College of Surgeons feels the best approach to defining alternative payment models begins with defining the surgical care model, the elements of the care team, and the outcomes produced by the team. Fee-for-service is built on the service provided as narrowly defined by one provider in a moment in time. For this single service in a single encounter, a payment is established without regard to the outcome.

The ACS experience demonstrates that many care models involve integrated teams, working toward a common goal to optimize the patient’s results with personalized risk-adjusted outcomes. Over the last half century, ACS has implemented a series of care model verification programs in the surgical domains for disciplines such as trauma and cancer care. In the most recent decades these have expanded to include pediatric surgery, metabolic and bariatric surgery, complex GI, vascular, and frail and elderly surgical care. These are team-based standards programs that define the roadmap to the best outcomes in care. Conformance with standards is the best effort to limit avoidable harms in surgical care. In addition, achieving the patients’ goals is represented in patient reported outcomes. It is these verification efforts that ensure an evidence-based care model has the focus of the entire team on patient outcomes.

The ACS model is born out in work published by the Harvard Business School. In 2006, Michael Porter and Elizabeth Olmsted Teisberg described a major approach to alternative payments when they published Redefining Health Care: Creating Value Based Competition on Results. Now, over a decade later, Porter et al. have accumulated a series of Harvard Business School (HBS) case studies to highlight the experiences in value-based care and alternative payments.

A closer look at the HBS-Porter case studies reveals several features that fit well within the American College of Surgeons’ framework for surgical care. These cases describe integrated practice units (which Porter calls IPUs) as teams treating patients by means of an array of various services within a specific time window for a discrete episode of care. Several of the episodes define the focus of the care, the need for a specific care model, the role of supporting data, dashboards for knowledge and learning, and the importance of outcomes and cost data.

In many of the IPU surgical examples used by Porter, it is noteworthy that a surgeon oftentimes noted the underperformance of their team. To improve care, that surgeon became the champion who was determined to make improvements to the care model and team performance to meet patient expectations. Combining the ACS standards, verification, and outcomes programs with the Porter IPU models would yield a playbook for implementing a highly valued surgical care model with new payment models. The basic elements of these two initiatives from ACS and Porter’s work when combined would establish clear requirements for surgical IPUs:

  1. Focus: Define a focused condition or surgical procedure, which must have a care model that spans the critical services within the care continuum by considering services from the onset to treatment and through recovery.
  2. Verification: Define and verify the key aspects of the care model through verification programs that assert a leadership commitment to a culture of safety and high reliability. The verification includes a surgical quality officer and a committee. The episode-specific care model must be expressed in the key phases of care and have a disease management system. Data are collected, surveilled, and used in data-driven quality improvement for the episode. Case review and peer review with a tie back to credentials and privileges are linked to the episode. And the institution participates in regulatory quality metrics applied to the domain.
  3. Cost: There are two major aspects of cost. The operating costs that are internal to the episode team (e.g., time-driven activity-based costing) and externally the costs to the patient and payer (e.g., EGM episode grouper logic). The external costs represent the price of goods and services to the patient and their insurer.
  4. Measurement: Outcomes and Total Cost of Care.
  5. Transparency: Certain measures of outcome and cost should be made public.
  6. Enabling IT: Registry data for conformance to standards, risk-adjusted outcomes, and patient-reported outcomes. A standard total-cost-of-care measure. The health IT should present a dashboard for the entire episode team, patients, and payers.
  7. Risk-based Contracts: Bundle or episode-based, risk-bearing contracts.
  8. Compensation Principles: Clinical compensation to physicians should reflect a minimum set of principles to align with the value-based care principles.

In order to facilitate adoption of episodes as alternative payment models, the delivery systems will need consistent means, such as a set of standards and a playbook to implement and manage their episodes. Without standards, if each delivery system or each payer created their own instance of an alternative payment system, it becomes too complex for a broad-scale implementation. Health care uses standardized approaches in payment models for fee-for-service using tools such as CPT, DRG, ICD-10, and CMS-1500s. It is time to move to standards for clinical care models and business models for the care teams to implement the care models. For alternative payment models to take hold using episodes or IPUs, the delivery systems and patients need to avoid unnecessary complexity of non-standardized care. The complexity can be limited by standardizing how episodes are constructed, how quality is determined, how payment occurs, and how compensation is aligned with value.

Episodes are constructed from several approaches. An episode construct may use a medical condition such as a cancer diagnosis. The episode could also be more narrowly defined by the treatment of the condition such as a surgical resection of a cancer, a chemotherapy course, or radiation treatment. A condition episode is broader, inclusive of larger teams and multiple treatment options. The early episode approaches have been more narrowly focused in smaller, more manageable teams around treatment such as the Oncology Medical Home or a surgical resection. Treatment episodes are a step toward broader condition episodes. The more comprehensive the condition episodes are, the larger the care model options and the greater the teams. Large-scale condition episodes are more complex, require significant data infrastructure, and offer the most in risk/rewards.

To move the playbook forward for pilot testing involves collaboratives built on the ACS and the Harvard Business School’s Institute for Strategy and Competitiveness around a framework for conditions or treatment episodes. Each episode requires a well-defined care model and team members. Optimal structure and process are held together using the verification framework to ensure evidence-based care pathways and that team roles are defined around quality, improvement, and cost. Enabling health information and supporting technology provide the outcomes measures with a focus on the patient’s experience and achieving their goals of care. Purchaser or payer engagement must define the scale for determining incentive-based payments to establish value and assign a risk/reward contract.

In conclusion, ACS believes team-based episodes of care with a framework provide a test bed for alternative payment models for selective conditions or treatments. These payment models require a playbook centered on patients and their care models, with a rich data infrastructure to support the team’s quality, improvement, and cost as a learning health system. Payer engagement is essential in design, implementation, and widespread adoption.

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