Implementing Bundled Payment: A Case Study of the Crozer-Keystone Health System

August 2013
Topics: Payment Integrity
This case study reviews Crozer-Keystone Health System's (CKHS) approach to and experience with a bundled payment (BP) program, as well as the steps CKHS has taken to prepare for wider implementation of episode-based payment.

The following excerpt provides an overview of the study. Implementing Bundled Payment includes a detailed description of CKHS's initiatives to support BP in the areas of care redesign, health information technology, and physician engagement. This study also considers best practices and lessons learned from CKHS's BP experience.

CKHS is a medium-sized, integrated, not-for-profit health system located in the suburbs of Philadelphia. This health system comprises five hospitals, a comprehensive network of primary care and specialty practices, numerous outpatient and specialized care facilities, and the HealthPlex Sports Club. With more than 1,100 physicians and 6,800 total employees, CKHS provides a full spectrum of wellness, prevention, acute care, rehabilitation, and restorative care services. In addition to its staff of employed physicians, CKHS collaborates with affiliated group specialty practices to provide certain services, such as orthopedic surgery.

Bundled Payment Pilot Program

In partnership with Independence Blue Cross, CKHS is piloting a bundled payment program for two inpatient procedures—hip and knee replacement. The pilot employs the PROMETHEUS Payment® approach, a publicly available, SAS-based software model that calculates budgets for bundled payments using claims data. CKHS is conducting its BP pilot as a simulation in which bundled payments are calculated and recorded for hip and knee replacement procedures, while actual reimbursement from Independence Blue Cross follows preexisting reimbursement arrangements.

Using this simulation pilot, CKHS has been able to deploy, evaluate, and refine numerous initiatives designed to support BP in advance of, and in preparation for, financial risk bearing. The knowledge and experience developed under the BP pilot has prepared CKHS and Independence Blue Cross to move beyond simulation. The two organizations hope to "go live" with BP for these procedures at some point after the pilot concludes in March 2012.

CKHS's leadership expects to leverage skills, expertise, and programmatic infrastructure developed through this pilot to inform the development of future BP programs for a wide range of procedures and conditions, including chronic diseases. CKHS plans to apply for the Bundled Payment for Care Improvement initiative operated by the Center for Medicare & Medicaid Innovation.

Download the full Implementing Bundled Payment: A Case Study of Crozer-Keystone Health System paper.

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