Discussion on Bundled Payment in Health Care

Questions: 1. What is your first impression of the BCBS proposal? Is BCBS being unreasonable? Should the group consider it? Why, or why not? (9 pts.)2. If Dr. Open decides to meet with BCBS, are there particular provisions that he should insist be included in any new bundled payment contractual arrangement? If so, please explain what they should be and why you think they should be included. (9 pts.)3. What data do you think Dr. Open needs to gather before entering into further negotiations with BCBS? Why? (7 pts.) Answers 1. The bundled payment arrangement proposed to our group sets the cost of each knee replacement surgery, including the combined cost of a pre-surgical analysis, the surgery and post surgical care for a period of six months, on the basis of local rates (Ridgely et al., 2014). Furthermore, the payment proposal also demands that five percent of the total cost fee be withheld by the company and only be returned to the company at the yearend if the group succeeds in meeting the quality standard negotiated prior to agreement by the company ("Blue Cross Blue Shield", 2017). This proposal reduces the cost structure to a ghastly average price, which cuts down on our individual charging programs and deceases the profits drastically ("Blue Cross Blue Shield", 2017). My first impression of this proposal as a group member is skeptical bordering on disagreement. Although, Blue Cross Blue Shield or BCBS group of companies are considered as health insurance giants of United States, proudly insuring one out of three Americans, and we cannot promptly refuse their offer ("Blue Cross Blue Shield", 2017). The corporate social responsibility of the company is to provide supportive programs to members ensuring best health care experience at all times, which has captivated the public from the very beginning. Therefore, their affordable plans might pose a challenge to the health care industry itself, though the entire payment method will be attractive to the customers and they will be more drawn to our group at time of need . However, their additional clause of withholding 5% is clearly intimidating and unacceptable as it pushes our already modest earning by bundled payment. Agreeing to their first demand would be enough to hit financial stability of the group, their additional clause might just be last blow. We have to consider that we have gained a significant reputation in the genre of knee replacement surgery and have a quality bar to meet. The reduced fee structure will already wear down the performance bar of the surgeons and the care members, additional cost cuttings can seriously affect the quality standards of our group. In healthcare, there often are additional expenses that are out of our control and under this plan the physicians are often penalized for the lifestyle choices of the patients and unavoidable medical costs (Mechanic Tompkins, 2012). Despite all the negative points, we have to take their grasp at the market into account and showing complete disregard for their proposal will not be wise. We have to aim for modifying some of the clause of their proposal and attempt to find a middle ground. 2. The glowing reputation of our group in the market gives us opportunity to stand our ground and negotiate the best suitable option for both parties. It will clearly be impossible to heed to all their demands, as that will seriously affect the annual revenue generation and will demote our performance standards. As per my knowledge, the bundled payment mode of transaction is meant to ease out the complex and frequent transaction procedure and ensure that there are no complications delaying the treatment procedure, and it is a noble initiative we can consider but we need to proceed with caution (Hussey et al., 2012). Despite their suffocating demands, we have to consider that BCBS has customer base to behold and merging with them will take our regional success to much broader spectrum ("Blue Cross Blue Shield", 2017). We cannot let go of this excellent opportunity to expand our customer base, but the basic challenge will be trying to influence their uncompromising stand to the negotiated fee structure. My first suggestion is to increase the fee structure to substantial amount, so that we can incorporate their payment plan without compromising on the quality standards. My second suggestion is to strongly oppose to their exclusionary clause of withholding 5% as a quality compensation as that will question our efficiency and productivity, and damage our reputation in the market. A substitution provision that we can put forth will include periodic quality and skill assessment programs that can assure them of our performance standard and infrastructure without burdening us with additional clauses (Rana Bozic, 2015). 3. A health insurance giant like BCBS will come with enough facts and figures in their arsenal to outsmart all attempts of ours undoubtedly ("Blue Cross Blue Shield", 2017). We have to prepare our own defense with unquestionable data if we want to succeed in making the most of this opportunity. The sky-high drug prices in America can be our first defense against their unrealistic demands, the lack of a national body, overlooking drug purchasing in America has caused a chaotic situation (Haberman, 2017). The drug prices are increasing in a rapid rate in our country and that will affect the treatment cost profoundly (Kliff, 2017). We need data that highlights this issue to support our argument so that the company realizes the cost hike is not much in our hands. Another important aspect should be our performance stats; if we want to convince them of our super specialty care standards, we need data to substantiate our claims. The success percentage of our surgeries and patient feedback will play an important role in establishing our credibility in front of them. The next set of data that we need in our arsenal can be the previous track records of our surgeons and care members, as that can persuade them to consider our growth potential in the health care industry. Lastly, there have been many fail cases of implementing bundled payment procedure, where the cost cuttings has drastically destroyed the quality standards, we need this data to negotiate best possible outcome out of this proposal so that our ambition to expand does not come in the way of our good work (Mehanic Tompkins, 2012). Reference List: Blue Cross Blue Shield. (2017). Bcbs.com. Retrieved 10 February 2017, from https://www.bcbs.com Haberman, C. (2017). Lives and Profits in the Balance: The High Stakes of Medical Patents. Nytimes.com. Retrieved 10 February 2017, from https://www.nytimes.com/2016/12/11/us/retro-report-medical-patents-profits.html Hussey, P. S., Mulcahy, A. W., Schnyer, C., Schneider, E. C. (2012). Closing the quality gap: revisiting the state of the science (vol. 1: bundled payment: effects on health care spending and quality). Kevin Drum - January 2016 | Mother Jones. (2017). Motherjones.com. Retrieved 10 February 2017, from https://www.motherjones.com/kevin-drum/2016/.../whats-real-reason-drug-prices-are-high Kliff, S. (2017). The true story of Americas sky-high prescription drug prices. Vox. Retrieved 10 February 2017, from https://www.vox.com/science-and-health/2016/11/30/12945756/prescription-drug-prices-explained Mechanic, R., Tompkins, C. (2012). Lessons learned preparing for Medicare bundled payments.New England Journal of Medicine,367(20), 1873-1875. Rana, A. J., Bozic, K. J. (2015). Bundled payments in orthopaedics.Clinical orthopaedics and related research,473(2), 422. Ridgely, M. S., De Vries, D., Bozic, K. J., Hussey, P. S. (2014). Bundled payment fails to gain a foothold in California: The experience of the IHA bundled payment demonstration.Health Affairs,33(8), 1345-1352.