Case Rate: An Analysis of Episode-Based Bundles
In this interactive exercise, we are going to walk through how UT Health Austin worked to create the episode-based bundles for the IPU clinics that you learned about in Module 4. Press the ’play ’ to begin.
Case Rate Goals
Patient
Clinician
Employer
Payer
Provider
At UT Health Austin, our alternative payment models exist to support our efforts in redesigning practices to maximally improve patient outcomes. So we start with the patient and with what our clinical leaders believe will most efficiently improve patient outcomes.
Most of our clinical leaders have come from environments where they’ve been told they cannot deliver care in the way that they want because the fee-for-service system don’t support it. There are tons of services that actually help patients that aren’t reimbursed, while the things that are most highly reimbursed don’t always help patients. And so what we start with is, “How do they actually want to deliver care, and how do we design a payment model that allows them to do that?” This inevitably improves outcomes and reduces costs, which employers like to see. Payers also like to see that. And then we try to make sure that the case rate is financially sustainable in the long term for the provider organization as a whole.
Patient
So we start with the patient and we think about who the patient should be and who we should be focused on if our goal is to improve outcomes and create cost transparency. So we:
-
Define the case rate to reduce unwarranted clinical practice variation -
Define the patient reported outcomes we will measure and report on -
Create an episode of care for which the patient’s responsibility is made clear up-front
Back Pain
Define inclusion criteria: ICD10 codes and sub-populations for which clinical standardization is appropriate
Exclusion of comorbidities that require significantly different clinical pathways
Appropriate, feasible point for episode trigger
The case rate definition really starts with appropriately defining the condition as the full set of conditions for which clinical standardization is appropriate and variation outside of a small range isn’t really warranted. The pricing requires defining the point at which we will be able to begin our episode of care.
Back Pain
35,000
beneficiaries
Apply ICD-10 Codes
1,979
beneficiaries
Estimated the episode of care by capturing up to 12 months of claims data for each low back pain patient (related services only) – starting from the first E&M visit with a specialist for low back pain
1,021
beneficiaries
We see this logic applied to a back pain case rate for a local employer on this slide. So what you see here is the local employer has 35,000 beneficiaries. When we apply the ICD-10 codes our clinical leader, Dr. Queralt, has developed to define the case rate, we end up with 1,979 beneficiaries who would have been included based on last year’s claims. But when we add the exclusion of site-of-care to look only for patients who were actually referred to a specialist—which is what our practice is—we end up with 1,021 beneficiaries. So Dr. Queralt has decided the case-rate should begin with a referral to our practice. That’s a referral from a primary care physician or a self referral into a specialty practice instead of a primary care practice. That definition brings the included population from 1,979 to 1,021.
Back pain: Exclusions requiring clinical variation
Low Back Pain with
Mid-back/ thoracic pain
Neck Pain
Non-specific back pain
Sacrocoggeal
Failed back surgery
Opioid dependence
Sciatica
Smaller exclusions:
Back pain caused by tumor, infection, metabolic disease, inflammatory arthritis or pregnancy
Then we think about the clinical exclusions that make sense because of comorbidities with lower back pain that may require clinical variation. So we start with the ICD-10 code of low back pain, and that can be combined with mid-back pain, thoracic back pain, neck pain, and non-specific back pain.
But for the sacrocoggeal pain, failed back surgery, opioid dependence, and sciatica, variations in the clinical pathway are warranted. We still want to take care of those patients, and we still will take care of those patients, but they would not fall in our case rate.
Back pain: Exclusions requiring clinical variation
1,021
beneficiaries
Applied the exclusion criteria for low back pain to the commercial employer with 35,000 beneficiaries, and excluded the sub-population from the case rate analysis
400 beneficiaries
with exclusion
criteria
The target population for low back pain case rate: 621 beneficiaries
We start with that 1,021 beneficiaries, and when we apply those exclusions that we just discussed, we end up with 400 beneficiaries that meet exclusion criteria and are removed. So we end up with 621 beneficiaries from last year’s claims that would be appropriate for our alternative payment model.
The key here is that we’re trying to adhere to evidence-based pathways, and we’re trying to reduce unwarranted clinical variation. So we’re trying to define a fairly homogenous set of patients for whom care shouldn’t really vary and costs shouldn’t really vary.
Clinician
The next step in our case-rate development process is to really focus on the clinician and to partner with the clinician to define the full set of multidisciplinary, interdisciplinary, and supportive services we need to deploy to help the patient improve.
What treatments enforce the status quo, and which better improve patient outcomes?
Drag and drop each icon to its appropriate row.
Rx Drugs |
CBT |
Surgery |
Injections |
Telehealth |
Imaging |
Transportation |
PT |
STATUS QUO |
CASE RATE |
CORRECT!
First, try out this exercise.
Which of these services seem fairly status-quo and are things that you’d expect to see in today’s health care environment?
Which of these seem like services that are not reimbursed, or are not reimbursed consistently or appropriately, but seem likely to help improve a patient’s outcomes?
In historical claims, we see high levels of utilization of injections, surgical procedures, advanced imaging, simple imaging, and prescription drugs, including opioids. While our care pathways include some utilization of some of these, it is significantly lower. For low back pain as we have defined it, we believe surgery is almost never warranted and it is not included in our case rate
On the other hand, we know intervening the day of an acute back pain episode or within 48 hours can hugely impact outcomes and costs, but patient in pain can’t always drive. Our case rate includes transportation for the patient to come to us the day of the episode for a same day appointment. Cognitive behavioral therapy is a critical part of our care pathways, as depression is highly comorbid with low back pain, but FFS contracts don’t always cover CBT. It is often carved out a separate payer or can be restricted to more expensive license levels. Both CBT and PT can sometimes best be delivered through telehealth, which is usually not reimbursed at all, with PT being supported through check-ins and virtual monitoring vs forcing the patient to come in because that is the only way we can bill.
Our case rate is designed to support the services that will actually help patients improve.
Employer
Payer
Next in our case rate development is to think about how we can demonstrate we can reduce costs and improve value. We do that three ways:
-
Hold costs constant or reduce them for the services covered by the case rate, -
Develop a joint framework for total potential savings under our care model, and -
Define the outcomes we will report on
Price the Case Rate to Reduce Payer/Employer and Member Spend
Example – historical spend for commercial employer with 35,000 beneficiaries
# of unique patients with low back pain 621 pts
|
Historical surgical rate 15%
|
Historical non-surg. spend/pt $1,461
|
Historical surg. spend/pt $22,512
|
Historical total spend $2.95 M
|
Historical spend/pt $4,750
|
We price the case rate to reduce payer and employer spend. We create a comparison to the services the case rate covers—we don’t cover surgery, so that number for this case rate, is $1,461.
Our price is $1,444, to mitigate one year of trend, using a conservative 3% per year for trend. But the surgical rate is 15%--and we believe that will go down materially. That reduction represents a significant portion of the future projected cost savings. So we’re keeping the payer whole on the case rate that defines the services covered, but really aiming to driving down that $4,750, which is the included per-patient spend when you include the surgical spend.
Back pain: Projecting potential savings*
Example – potential savings for commercial employer with 35,000 beneficiaries
Surgical rate |
15% |
<5% |
Opioid prescriptions |
6% |
<1% |
Total annual spend/pt |
$6,000 |
<$5,400 |
Missed days of work |
10 |
<10 |
Assuming 50% of the population came to us for their care, potential savings for the employer is $660K, or 22%, annually
-
Assuming spend at other places equals to the employer historical spend with a 3% trend -
Assuming 50% of the population came to us for their care, potential savings for the employer is $660K, or 22%, annually
Now we get to part two of how we create value for the employer or the payer through our payment model. This involves projecting the total potential savings that are included in our program, not just the services that are included in the case rate. There’s four components for how we thought about that for this program.
1. The surgical rate reduction:
a. We anticipate the surgical rate to go from 15% in historical claims to close to zero since our clinical leaders almost never pursue surgery for these patients.
2. The surgical rate reduction:
a. The historical rate is about 6% for these patients; our leaders almost never prescribe opioids.
3. The surgical rate reduction:
a. The total annual medical spend for this population is 290% greater than the median for this employer. We anticipate we will be able to lower that at least 10% for this population.
4. The surgical rate reduction:
a. The missed days of work annually for this population is 10 days. We aim to reduce that number.
The total savings that result from the combination of these four metrics would be one metric by which we would measure the program.
Back pain: Reporting on outcomes
For all patients:
- PHQ2: Depression
- GAD: Anxiety
- NIDA: Substance Abuse
- PGI: Global Impression
Back pain specific functional scores:
- Oswestry Disability Index
- Neck Disability Index
The third way we seek to demonstrate value to the employer and the payer is by collecting patient-reported outcomes at the beginning and end of the episode of care. We collect the depression, anxiety, and substance-abuse patient-reported scores as inputs into treatment, but we collect the patient – global impression of improvement, the ODI, and the NDI both at the beginning and the end of the episode of care, and this is where we really seek to measure change.
So the employer, payer, and patient all can see a measurable, numeric, quantified view of how their own experience of their condition has changed over time.
Provider
Our internal leadership, like all provider organizations, wants to ensure the investments we are making will be financially sustainable.
Defining a construct for sharing in the total savings generated is how we’re doing that.
Constructing a shared savings approach
Example – potential savings for commercial employer with 35,000 beneficiaries
Surgical rate |
15% |
<5% |
Opioid prescriptions |
6% |
<1% |
Total annual spend/pt |
$6,000 |
<$5,400 |
Missed days of work |
10 |
<10 |
Partial potential savings in FY2019 if UTHA sees 50% of projected volume |
||
Expected surgical rate reduction |
70% |
|
Expected total spend at UTHA |
$0.79 M |
|
Expected total spend at Other providers (25%)* |
$1.50 M |
|
Expected employer total spend |
$2.29 M |
|
Expected total savings with UTHA |
$0.66 M |
*Assuming spend at other places equals to the employer historical spend with a 3% trend
Here we’re looking at only one of the components of the total savings that we discussed earlier, and that’s the surgical rate reduction. If we succeed in making at least a 70% reduction in the surgical rate—going from 15% to less than 5%--there should be about $660,000 dollars of savings generated.
Total Potential Savings
$660,000
Payer share—70%
$460,000
Provider share—30%
$200,000
What we’ve discussed with this particular employer is a 30/70 split. So the employer would keep 70% of those savings, and the provider organization would keep 30% of those savings, which is $200,000 annually.
Bringing it all together: Benefit Design to Support Pricing and Value Construct
- Single co-pay aligned with case rate
- Patient engagement integrated with existing workflows
Employee with acute low back pain condition
Sick day notification
Told about UTHA program
Received a call from UTHA or called
Provided a same-day appointment with a Lyft to UTHA
We talk about the importance of multidisciplinary, interdisciplinary care, and team-based care, and that’s really critical to driving improvements with back pain. However, if patients are getting hit with a co-pay every time they talk to therapist, a social worker, a physical therapist, or a chiropractor, it doesn’t really feel like a team. It feels like a long list of providers and services that don’t really fit together. So we’ve sought to create a single co-pay that’s aligned with the case rate so patients can really access all the services they need without feeling like they’re being with with co-pay after co-pay after co-pay and so they can have transparency into their total costs.
We’ve also tried to integrate the patient’s engagement with our program with the workflows that they’re already used to. So for this particular employer, the individual will notify their HR team when they will not be coming into work because they’re sick. The HR team asks about the reason or kind of illness they have. Once they inform the HR team that they have back pain, or anything resembling back pain, they’re told about the UT Health Austin program. They then receive a call from UT Health Austin offering a same-day appointment, and are provided transportation as needed.
It’s our goal to make sure the patient can get to us when they have their problem, and that once they’re in the program, their member responsibility and their financial responsibility is aligned with how the program is structured overall.
Ben is a colorectal cancer patient whose care via integrated practice unit (IPU) you may have explored in Module 4, Section 9: Designing an Integrated Practice Unit.
As a clinician on Ben’s service, how would different payment models incentivize or de-incentivize the following clinical services?
For each of the following models, fee-for-service, episode-based bundles, and capitation:
-
Indicate where you are incentivized by choosing the + icon. -
Indicate where you are de-incentivized by choosing the − icon.
CORRECT!
Generally, alternative care models such as episode-based bundled payments and capitation incentivize clinicians to provide higher value care, while fee-for-service incentivizes clinicians to provide lower value care. Please continue to the reflection question below this activity.
FEE-FOR-SERVICE | EPISODE-BASED BUNDLE | CAPITATION | ||||
---|---|---|---|---|---|---|
Repeat routine imaging without evidence-based indication | ||||||
Connecting care to PROMS | ||||||
Nurse phone call to address Ben’s concerns or issues | ||||||
Complication from medical error |