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Emerging Healthcare Organizations in an Era of Reform Series
Part 4 - Bundled Payments
This is the final article in a series of four regarding new models and arrangements for emerging healthcare organizations (EHOs) in light of the continuing efforts towards healthcare reform. Past issues discussed Co-management arrangements, Accountable Care Organizations (ACOs), and Medical Home Models. In the November 2010 issue, we will begin a new series on various aspects of the Patient Protection and Affordable Care Act of 2010.
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 Emerging Healthcare Organizations Series: Bundled Payments
This last installment of our Emerging Organizations Series focuses on bundled payments, a reimbursement scheme promoted by the Patient Protection and Affordable Care Act. Generally, a �bundled� payment is a single payment for reimbursement to multiple providers (e.g. both hospitals and physicians) that covers all services involved in a patient�s care. Bundled payments may help facilitate reform efforts through lowering overall costs for healthcare by simplifying reimbursement and administrative systems, and encouraging integration between providers of various specialties.
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Standalone Hospitals Struggling to Survive
In a healthcare market dominated by significant mergers and acquisitions in recent decades, the healthcare network appears to be a prominent fixture in the new era of healthcare reform, while the small �standalone� hospital has become an increasingly smaller blip on the healthcare indusrty radar. From 2008 until the present, two major factors have accelerated this trend: the economic downturn and the recent healthcare reform. Events surrounding the economy and the implementation of healthcare reform must continue to play out, before the effects on standalone hospitals will be fully understood.
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Plan Administrator Abuses Discretion Under ERISA
The United States Fifth Circuit Court of Appeals recently upheld a District Court decision ruling that a health plan violated the Employee Retirement Income Security Act (ERISA) by refusing payment to a hospital for health services it felt were not "customary and reasonable." In the case, Baptist Memorial Hospital-Desoto, Inc. v. Crain Automotive, Inc., decided on August 19, 2010, the Court held that the plan administrator had abused its discretion in denying the claim. This decision upholds previous case law requiring reasonable and customary determinations to be based on factual evidence and prohibiting payors from uniformly adopting a low fee schedule for all out-of-network services.
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Beyond RACs: ZPICs, MICs, & MACs
In the years since the Tax Relief and Healthcare Act of 2006 much attention has been paid to Medicare and Medicaid fraud and abuse. This Act increased enforcement against fraudulent and unnecessary claims for services under the Centers for Medicare and Medicaid Services. The Act called for an overhaul of CMS claims payment contractors with the implementation of Recovery Audit Contractors (RACs). While RACs have garnered significant attention in this area, Zone Program Integrity Contractors (ZPICs), Medicare Administrative Contractor (MAC), and Audit Medicaid Integrity Contractors (Audit MICs) have gained prominence in recent years and may become more prevalent in the new stages of the current healthcare reform.
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