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McKesson To Standardize Next-Gen Healthcare Payments

IT powerhouse will use bundling automation software to promote payment approach that's being piloted by insurers across the country.

Ken Terry

November 19, 2012

4 Min Read

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As bundled payment pilots proliferate nationwide and Medicare prepares to launch a large-scale bundling demonstration, McKesson and the Health Care Incentives Improvement Institute (HCI3) have agreed to collaborate to standardize components of HCI3's Prometheus Payment model. Their goal is to make it easier for health plans and providers to use Prometheus Payment in payment bundling programs. Bundling is a payment model that covers a comprehensive episode of care and reimburses providers for all patient services related to a single illness or condition.

"If payers can standardize on the Prometheus model, we hope it will encourage adoption [by providers]," said Amy Larsson, associate vice president of emerging solutions, McKesson Healthcare Solutions, in an interview with InformationWeek Healthcare.

Prometheus Payment was launched by healthcare experts in 2006 with support from the Robert Wood Johnson Foundation. Commonly accepted clinical guidelines or expert opinion determine which services will be covered under the bundled payment.

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Based on those definitions, payers calculate an "evidence-based case rate" (ECR) that creates a budget for each care episode. The ECR is adjusted to take into account the severity and complexity of each patient's condition. A portion of the ECR is withheld and paid in bonuses to providers that meet quality benchmarks and reduce the amount of potentially avoidable complications. These bonuses depend partly on what the entire care team does, encouraging better care coordination.

To date, Prometheus Payment ECRs have been developed for acute and chronic conditions and inpatient procedures, including acute myocardial infarction (AMI), hip and knee replacement, diabetes, asthma, congestive heart failure and hypertension.

Among the organizations that have tested Prometheus Payment are Health Partners in Minneapolis, Independence Blue Cross and the Crozer Keystone Health System in Pennsylvania, the Employers Coalition on Health in Rockford, Ill., Priority Health and Spectrum Health in Michigan.

McKesson, meanwhile, has been piloting its Episode Management software with Aetna and another large payer that it has not yet identified. The Aetna test is part of a larger Integrated Healthcare Association (IHA) initiative in the Golden State, said Andrei Gonzales, MD, director of McKesson's episode of care pilot program, in an interview.

The McKesson Episode Management application, which can be configured for various models, is designed to automate bundling in payer claims systems, noted Larsson. The advantage of this approach, she pointed out, is that "no fundamental changes need to be made within the provider system or the payer system in order to administrate the payment process. It works within the context of how claims are currently processed today."

McKesson can also generate reports for providers that accept bundled payments, she said. Those can help them work with payers and can give individual providers a better idea of the costs that a particular case generates across the continuum of care.

In the Prometheus model, the McKesson software will identify which provider claims are related to the episode of care. After aggregating those claims, the application will determine whether or not the providers stayed within their budget for the episode of care and will reconcile the payments retroactively.

The Centers for Medicare and Medicaid Services (CMS) will start its payment bundling demonstration on Jan. 1. There will be four bundling options based on episode of care definitions, including retrospective payments for hospitalizations, hospital stays plus post-acute care, and post-acute care only, as well as prospective payments for hospital stays. According to Gonzales, these bundled payments would cover 70% of Medicare spending if they were applied to all providers.

Clinical, patient engagement, and consumer apps promise to re-energize healthcare. Also in the new, all-digital Mobile Power issue of InformationWeek Healthcare: Comparative effectiveness research taps the IT toolbox to compare treatments to determine which ones are most effective. (Free registration required.)

About the Author(s)

Ken Terry


Ken Terry is a freelance healthcare writer, specializing in health IT. A former technology editor of Medical Economics Magazine, he is also the author of the book Rx For Healthcare Reform.

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