Ellis Medicine in Schenectady, New York announced last week that it entered into agreements with MVP Health Care and Capital District Physicians Health Plan to offer a “warranty” to patients who undergo cardiac surgery at its hospital facility.

Under its Cardiac Surgery Warranty program, Ellis has agreed that if a patient following doctor’s orders develops related complications within 90 days of coronary artery bypass graft (CABG) surgery and is readmitted to Ellis, the patient will pay nothing for the second hospital stay. Patients must consent to participate in the Cardiac Surgery Warranty program and sign a contract agreeing to attend rehab, quit smoking and take other steps to reduce the chance of complications. All the payors’ commercial plans are included in the program, including Medicare Advantage plans.

This model is intended to replicate the Proven Care Program at Geisinger Health System in Pennsylvania. The key difference, however, is that the Geisinger system includes both hospitals and payors, whereas Ellis has entered into financial arrangements with two separate and independent entities. Ellis will share with CDPHP and MVP in the responsibility for hospital costs if the patient is readmitted.
Currently, Ellis Medicine’s readmission rates for heart failure patients are no different than the national rate, meaning its rates of readmission are not better or worse than the national average. Geisinger’s rate for readmission for heart failure is better than the national average.

The program includes steps to standardize care before and after surgery. A key legal issue that must be addressed in these arrangements is how the cardiac surgeons will be incentivized to ensure such standardization. Physicians could receive a bonus based on quality measure and other outcomes, but such bonuses must be consistent with fair market value. While data is available to assess the fair market value of a physician’s time, it is not readily available to assess the value of providing quality care.