Why bother with bundled payments?

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John Driscoll, CEO of CareCentrix
John Driscoll, CEO of CareCentrix

The Trump Administration frequently focuses on reversing President Obama's legacy in healthcare, trying to repeal the Affordable Care Act and generally moving to relax federal requirements for healthcare. This pullback has extended to bundled payments.

Episode Payment Models and Cardiac Rehabilitation incentives were canceled, and the new Bundled Payments for Care Improvement Advanced (“BPCI Advanced”) program is voluntary, a reversal of the Obama era progression toward mandatory programs.

Provider organizations may be tempted to take the recent cue from Washington to retreat from bundled payments and value-based models more broadly, returning more squarely to the traditional fee-for-service model. That would be a mistake. In fact there are at least five good reasons for providers to participate in bundled payments:

1. Bundles make sense.

They put specialist physicians at the center of complex care, providing mechanisms for the specialist to take an interest over the whole course of treatment, including the post-acute period. That is good for patients, who benefit when those who best understand the medical issues and treatments have a central stake in outcomes.

It's positive for payors, because more optimal care throughout the episode helps patients get better, faster at lower cost. Some specialists prefer the bundled approach, because it is an empowering model that provides financial rewards and reduces burnout.

High-performance, long-term care providers will benefit too, as referring physicians take a greater interest in high-quality, efficient facilities.

2. The new approaches are more streamlined.

The CMS Innovation Center has incorporated experience from its earlier efforts, including the original Bundled Payments for Care Improvement, Oncology Care Model, and Comprehensive Care for Joint Replacement program, into a simpler initiative with fewer measures and adjustments.

The new BPCI Advanced is more streamlined and less bureaucratic to administer. For example, quality measures will be based on claims through 2020, and the Innovation Center is actively seeking feedback from clinicians on how to improve those measures in future years.

As a bonus, BPCI Advanced counts as an Advanced Alternative Payment Model under CMS's Quality Payment Program, thus lightening MIPS reporting requirements for participants.

3. Bundles provide learning opportunities.

CMS grants BPCI Advanced applicants access to four years of their own historical claims data, coupled with an analysis of improvement opportunities and estimates of the potential savings available from participation. Providers who commit to the program will receive objective feedback and benchmark data that will help them improve their performance for BPCI and more broadly. They can gain an advantage over peer organizations that decline to participate.

For example, successful participants in the original BPCI program deployed a variety of approaches that boosted their performance. These included leveraging post-acute care, patient engagement, data analysis and presentation, development of improved care protocols, and coordination of personnel from multiple disciplines.

Over time, the cumulative learning from bundles can help generate a competitive advantage in quality and cost.

4. Remember the commercial market.

Commercial health plans have modeled their offerings on earlier CMS initiatives, such as Accountable Care Organizations. Once the federal government seeds the market with a new approach, it lowers the bar for payers to introduce their own, related programs.

To date, commercial payors have been relatively slow to embrace bundled payments, but that is likely to change as providers gain more experience, especially if the promise of cost savings and quality improvement is borne out.

Those providers that go down the learning curve with bundled payments now will be better positioned to handle bundles once commercial programs begin in earnest.

5. What goes around comes around.

Mandatory programs are not currently in vogue, yet it's striking just how much the value-based approach has been sustained at the federal level. And despite the broadsides against the Affordable Care Act, the main animus has been directed against the Obamacare marketplaces, individual mandate, Independent Payment Advisory Board, and targeted taxes. One could easily imagine the Administration and Congressional ACA opponents ridiculing the Innovation Center (“Since when is government innovative?” for example) but it hasn't happened.

Rather, there appears to be a reasonably strong consensus that value-based care, and bundled payments in particular, are a promising approach that the federal government should encourage.

There is also speculation that BPCI Advanced may be a precursor to replacing the current DRG system — basically a bundled payment within a hospital—with a broader bundle that encompasses the full episode of care. It's a logical progression, and if properly implemented it would benefit the major stakeholders.

Of course that's not even taking into account the possibility that Democrats retake Congress and eventually the White House, and the focus potentially returns to a more directive approach.

John P. Driscoll is CEO of CareCentrix.

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