The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


Care Coordination Under Medicare

By Truven Staff
Mike Taylor imageThe recent announcement by the Centers for Medicare and Medicaid (CMS) concerning payment for care coordination is a step in the right direction.

Dr. Matthew Press, an internist in academic medicine, aptly described how demanding excellent care coordination can be. In the August 13, 2014 edition of the New England Journal of Medicine, Dr. Press wrote of his work with a patient (Mr. K.) who had recently been diagnosed with a mass in his liver:

“Over the 80 days between when I informed Mr. K. about the MRI result and when his tumor was resected, 11 other clinicians became involved in his care, and he had 5 procedures and 11 office visits (none of them with me). As the complexity of his care increased, the tasks involved in coordinating it multiplied. I kept a running list and, at the end, created an “instant replay” of Mr. K.'s care (see diagram; also see animation, available with the full text of this article at In total, I communicated with the other clinicians 40 times (32 e-mails and 8 phone calls) and with Mr. K. or his wife 12 times. At least 1 communication occurred on 26 of the 80 days, and on the busiest day (day 32), 6 communications occurred.”

Dr. Press went on to comment he doesn’t have a full-time practice, but splits his time between teaching and caring for patients, and acknowledged how difficult care coordination can be for a physician practicing medicine full-time.

Many primary care physicians have provided care coordination without compensation, but it’s hoped this policy change by CMS will drive improved outcomes. I should point out that care coordination is an integral part of the patient-centered medical home concept. It’s generally a process used by most organizations that provide care using a team-based concept that is value-based, not based on traditional fee-for–service reimbursement.

There will be challenges.  Most physicians are highly ethical, but there’s a potential for abuse and perhaps even fraud. I can imagine a physician hiring a nurse practitioner to do nothing but make telephone calls to elderly patients with several chronic diseases. The CMS requirement for the patient to agree, in writing, beforehand and the patient footing 20% of the bill should drive accountability, but this new program will require oversight. Is the $42 per month proposed by CMS enough compensation to make this worthwhile? I would expect that smaller practices won’t find this feasible at that rate of pay. The requirement that someone from the medical practice be accessible 24/7 may also give physicians some pause.

Even with the inevitable uncertainties of any new program, I think larger, well-organized practices will find this new policy helpful in caring for some of their most complex patients, and I’m hopeful many practices will integrate care coordination into their management of the care of these patients.

Michael L. Taylor, MD, FACP
Chief Medical Officer

CMMI Releases Updated Baseline Pricing for Bundled Payments

By Truven Staff
David Jackson imageOn May 1, 2014, the Center for Medicare & Medicaid Innovation (CMMI) released Model 2 and Model 3 Mock Reconciliation Results for Q2 2013 to provider organizations going at risk under Phase II of the Bundled Payments for Care Improvement Initiative (BPCI). While the results shared were intended to be informational and to help awardees better understand the reconciliation process, reported changes in baseline target prices raised a few eyebrows across the community of BPCI stakeholders. CMMI notified participants that the 2012 baseline prices were different than previously reported to awardees in August of 2013 due to changes in baseline episodes assigned to participants. Specifically, those participants who had entered into risk agreements (Phase II) have precedence over not risk bearing (Phase I) participants in assignment of episodes. However, there were also notable changes in case mix weights, historic trend factors and risk track thresholds for the 2010 – 2012 baseline period. The combined impact of these changes may significantly impact  2012 baseline target prices. Depending on the direction and magnitude of impact, the financial savings or loss projections for a given participant may change. We recommend all participants revisit those initial projections as part of their work to create a process for ongoing reconciliation.

Many of the BCPI stakeholders were under the impression that target prices reported in August 2013 were in essence “locked in,” so they were surprised to see some target prices driven down, in some cases significantly, for key higher volume DRGs, as we observed for major joint replacement surgeries. Lower than expected target prices ultimately mean lower than expected hard-earned savings a participant may recoup as a result of care redesign and coordination efforts.

According to CMMI representatives, upon advice from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), CMMI switched from deriving national historic episode statistics from a national random sample of 7,000 cases per DRG to the entire national universe of all Original Medicare episodes. The switch in national baseline episodes altered the historic trend factors, case mix weights, and risk track trim points affecting calculated target price, in some cases unfavorably. CMMI has commented that this degree of change was unexpected, but is a one-time occurrence and is not expected to change to this degree in the future. CMMI will continue to utilize the national episode universe baseline. While the shift to a national universe for establishing trend is positive, we believe CMS should consider an additional change to exclude participants from the trend calculation. Furthermore, we believe participants should anticipate substantial variation in quarterly financial results especially for low volume episodes and plan accordingly.

On the plus side, CMMI is making strides in providing greater resources to support participants through more frequent engagement and development of feedback mechanisms to help them understand how they stand in comparison to other episode initiators participating in the BPCI program. CMMI has established dedicated representatives, who will each work with approximately 25 awardees, to schedule regular discussions. They hope to have additional feedback mechanisms available for the first reconciliation time frame. In the meantime, to help drive success, it’s important for all BCPI participants to stay proactively engaged with CMMI and express their concerns and needs around information.

As organizations attempt to predict the financial success and the impact on their relationships with other participating providers through gain sharing or other business arrangements, they must keep track of many moving parts. Target prices will continue to be a moving target and CMMI will only be able to provide the final target prices quarterly, along with each retrospective reconciliation period. So it's important for the BCPI community to establish internal forecasting processes and request additional information, for example, historic quarter to quarter trend factors to better assess potential pricing volatility. CMS has invested heavily in providing data that when used to its full potential, can help facilitate positive transformation.

But it’s imperative for participants to monitor the impact of changes or clarification to BPCI program policies and to provide feedback. We encourage you to share your thoughts with CMMI. The e-mail address for feedback and questions regarding the BPCI program is

David Jackson
Senior Consulting Manager