Statement of the problem: Medicare payment structure creates little incentive for providers to coordinate care across treatment modalities. Bundling is the practice of providing a fixed payment for a set of services. CMS and MedPAC are reconsidering options to bundle payments for a given acute and post-acute care episode across providers. In theory, by concentrating the accountability in one place, bundled payments should encourage smoother transitions and better coordination of care as the patient moves from the hospital to the post-acute care environment. The effective implementation of a bundled payment system faces several challenges, including ensuring that hospitals can form the necessary agreements with other providers on how the single payment will be allocated, measuring quality and implementing quality improvement initiatives and the construction of risk-adjustment systems. Implementing bundled payments in rural settings raises several additional challenges if the policy is to achieve its desired results.

Project goals: The purpose of this project is to: 1) Identify opportunities and potential unintended consequences for rural providers of current proposals for implementing bundled payments for acute and post-acute care episodes; 2) Describe modifications to current bundling proposals that will address rural-specific issues; and 3) Identify quality measures related to care coordination that are relevant for rural patients whose services are reimbursed by a bundled payment.

Methods: We will review the literature on economics of organizations, rural health, and organization theory to identify opportunities and potential unintended consequences with bundling acute and post-acute care episode payments in rural settings. The results from this literature review will inform a set of structured interviews with administrators in rural PPS hospitals, CAHs, long-term care, rehabilitation facilities and home health agencies in rural settings and with referral hospitals and primary care and specialty physicians. Finally, we will review the literature on care coordination related issues particularly in the context of developing relevant quality-related measures. We will use the interview results and the care coordination literature review to develop a set of quality measures related to care coordination that are relevant to rural patients whose services would be reimbursed by a bundled payment. The quality measures will be reviewed by a set of experts with knowledge of care coordination issues as well as the rural health environment, and adapted as needed.

Anticipated Publications or Products: The products of this project will include a final report, a policy brief, an article that will be submitted to a peer-reviewed journal, and presentation abstracts that will be submitted to state, regional and national conferences.

Publications

• Will Bundling Work in Rural America? Analysis of the Feasibility and Consequences of Bundled Payments for Rural Health Providers and Patients
  Policy Brief
  Upper Midwest Rural Health Research Center
  Date: 09/2011
  This report assesses the challenges and consequences for rural providers and patients of implementing bundled payments for acute and post-acute care episodes; explores impacts on care quality under a facility-physician bundled payment system; and describes potential modifications to bundling proposals and steps that could address rural issues.