Bundled payments on ‘pause,’ but not for long

September 1, 2017
Aine Cryts

Aine Cryts is a freelancer based in Boston. She is a frequent contributor to Managed Healthcare Executive on topics such as diabetes, oncology, hospital admissions and readmissions, senior patients, and health policy.

Political uncertainty plagues new payment arrangement, but private payers embrace new model.

CMS announced in August that it proposes canceling the Advancing Care Coordination Through Episode Payment Models (EPMs) and the Cardiac Rehabilitation Incentive Payment Model. The proposed rule also seeks to make participation in the Comprehensive Care for Joint Replacement (CJR) model voluntary in 33 of the 67 geographic areas where it’s now mandatory. This is in addition to two announcements earlier this year postponing amendments to the CJR and the start dates of its five-year demonstration programs.

The proposed cancellation of mandatory bundles from CMS is a great indicator that voluntary bundles will be announced imminently, says Carter Paine, chief operating officer at Newton, Massachusetts-based naviHealth, which develops software for care transitions. His reasoning? CMS and the Center for Medicare and Medicaid Innovation (CMMI) recognize bundled payments’ value and support their expansion in response to market demand.

Paine says that the next iteration of Bundled Payments for Care Improvements (BPCI) will likely qualify as an Advanced Alternative Payment Model under MACRA, which creates an opportunity for hospital-based specialists and surgeons. 

“The approaching BPCI model creates a compelling physician alignment opportunity for health systems that are seeking to establish better relationships with these high-value providers,” he says.

Success strategies

CMS’ proposal to move away from mandatory bundled payments hasn’t dampened private payers’ interest in such models, and physicians and health systems need to prepare. Here’s how to thrive in such arrangements, whether through partnerships with CMS or with private payers. 

 Determine cost variations

With any bundle, the most important thing is to figure out the biggest cause of variation that’s associated with a big dollar amount, says Anne Wong, a director with strategy&, a consulting firm that’s part of the PwC family of companies. “Once you crack that nut, you’ll be able to be successful with bundles,” she says.

For example, readmissions can contribute to the high costs associated with coronary artery bypass grafting (CABG), says Wong. Thus, rehabilitation should be as standardized as possible, which means healthcare providers should study their care pathways and look at the different drivers of cost and variability.

Next: How to find the right bundle for you

 

Find the right fit 

Try to participate in bundled payment models with which you are most likely to be successful. Oncology, for example, is a good fit for bundled payment because cancer patients typically receive highly expensive care that involves a lot of interaction with multiple providers, says Colin Luke, an attorney with Nashville, based law firm Waller Lansden Dortch, & Davis.

Innovation in technology and drugs have driven up survival rates for cancer. Still, there’s an opportunity for providers to work together to achieve better outcomes and more cost-effective care with better care coordination, says Luke.

Specifically, with breast cancer, he recommends the introduction of social workers who can help patients navigate through their chemotherapy or radiation therapy appointments-in addition to monitoring the “whole health” of these patients. That often involves calling patients to make sure they’re taking their medications and monitoring any associated side effects, adds Luke.

He suggests that social workers can also help coordinate care for patients including determining how they’re tolerating treatments-and that can save the health system money. Social workers can also spend the time getting to know patients’ family histories and determining whether non-healthcare-related stresses are impacting their care.

 Get the numbers right

In order to be successful with bundled care, somewhere between 20% and 30% of a health system’s care must be reimbursed in this manner, says Wong. Until bundled care hits this “magic threshold,” hospitals typically aren’t able to recover the infrastructure costs required with redesigning care for bundled payments, she says.

For example, health systems need to invest in data and analytics in order to have an accurate understanding of their costs and outcomes-and what’s driving variability. Wong points to readmission rates as one area where providers need to understand specifically what’s happening with patients who continue to return to the hospital. She says that providers will also need to invest in their administrative infrastructure, since the current fee for issuing bills and receiving payments won’t work under value-based care. That will require investments in new systems or “middlemen” to accomplish these administrative transactions.

Wong cautions healthcare organizations against assigning a middle manager the responsibility for managing bundled payments. Rather, she says that the drive toward bundled payments needs to come from executives who are serious about rethinking about how healthcare is delivered and reimbursed. 

If bundled payments are treated as a “little [project] on the side,” she says, they’re “doomed to fail.”

Next: A new care paradigm?

 

 

A new care paradigm?

Private payers are working with large employers to develop more innovative approaches to pay for the management of chronic diseases such as diabetes and even behavioral health, says Luke. 

Wong suggests that some healthcare providers will start to specialize in the treatment of diabetes and other chronic conditions. Because of their knowledge in managing the care of these patients and driven by economic incentives, these providers will become known for their expertise and, thus, increasingly take on the care of companies’ employees with diabetes.

For a successful model to study, insurers could look to Medicare Advantage plans that specialize in taking care of Medicare patients, she adds. “They have figured out a better care model that’s not confined by a period of time. Rather, it’s about putting the right infrastructure in place to more effectively care for the Medicare population-even under global capitation,” says Wong.

Still, she hasn’t seen bundled payments for either diabetes or behavioral health during the course of her client work. “It’s a supply-demand mismatch,” she says, referring to the reality that healthcare providers don’t see the incentive associated with taking part in such bundles, whereas the incentive is clear for employers who want to manage their employees’ healthcare costs.

Aine Cryts is a writer based in Boston.

This article was updated on September 3, 2017. 

Related Content:

Business Strategy | News