Bundled Up: How Health Plans Can Succeed With Bundled Payments | Geneia

Bundled Up: How Health Plans Can Succeed With Bundled Payments

August 29, 2016
Mark A. Caron, CHCIO, FACHE / Chief Executive Officer, Geneia


Five years ago, exactly zero percent of Medicare payments were tied to reported value measures. Today, 30 percent of payments are linked to value. In just three more years, this figure is expected to reach 90 percent. Health plans and their provider networks must understand and align practices with these new measures to sustain, maintain and grow revenue while providing increasingly better care.

One Type of Value-Based Reimbursement Is Bundled Payments

Bundled payments provide a single payment for an episode of care, diagnosis or condition to be shared among involved providers and facilities. They work because they encourage and reward providers based on shared savings and coordinated care between multiple providers across multiple settings, encompassing all delivered services. Effective care coordination not only leads to a better patient experience but also reduces redundancy and waste in the system caused by disjointed and inconsistent services.

In 2013, the Centers for Medicaid and Medicare Services (CMS) introduced the voluntary Bundled Payment for Care Improvement (BPCI) initiative. This program featured 48 bundles of care and four risk models from which participating providers could choose. In a relatively short period, BPCI led to significant savings while either maintaining or improving care outcomes.

Encouraged by this success, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) required CMS to refine the 48 BPCI bundles and to develop care episode groups that define procedures and services typically provided for a range of conditions and diagnoses.

In April of this year, CMS enacted the Comprehensive Care for Joint Replacement Model (CJR), a program for bundled payments in the areas of hip and knee replacement. Knees and hips are considered ideal for bundled payments due to their frequency among Medicare beneficiaries, significance in Medicare spending, and clarity of service boundaries. In 2014, more than Opt3BundledPaymentsTextInsert400,000  Medicare beneficiaries received knee and hip replacements with a cost of more than $7 billion for hospitalization alone. The CJR program aims to propel coordination of services between the hospitals, skilled nursing facilities, rehabilitation centers, and home health agencies involved in hip and knee replacements from beginning to end of care. For the first time, hospitals are being held accountable for the critical 90-days of care once the patient is discharged from the hospital setting. The CJR impacts 67 geographical regions of the United States, encompassing 794 facilities.

Knees and hips were only just the beginning, however, as on July 1, CMS announced the start of a voluntary, five-year, multi-payer oncology care model (OCM) aimed at improving care throughout critical and expensive chemotherapy treatment for cancer. For this vulnerable population, CMS targets the coordination of services across all settings along, provides for patient access to 24-hour clinicians, and real-time access to medical records. Oncologists clearly understand the high value of coordinated patient care during chemotherapy treatment, as they applied to participate in the OCM at nearly double the anticipated rate. Ultimately, CMS chose 17 commercial payers to participate along with nearly 200 physician groups representing more than 3,200 oncologists and approximately 155,000 Medicare beneficiaries nationwide.

These bundles confirm CMS’s commitment to driving value-based alternative payment models (APMs) across the medical landscape. The widespread acceptance and overwhelming interest expressed by providers and payers alike in the OCM means bundled payments will remain a fixture in the future of health care.

CMS anticipates future bundles to have similar requirements as the recently revealed oncology model. Unlike the CJM model, the oncology model has 17 commercial payers participating. These payers are invited to design their bundles, enabling them to maximize cost savings opportunities that take advantage of their unique health plan and provider network capabilities. Advanced analytics enable payers to accurately evaluate their network abilities and reduce variations in care delivery. Analytics helps guide optimal bundle design and monitor performance to improve over time to reduce costs and deliver increasingly better care to those members most in need.

Successful Care Coordination

In the oncology model, CMS provides a $160-per-beneficiary-per-month payment to participating practices for non-patient-facing coordination activities. The monthly benefit generates substantial capital and helps facilitate meaningful care coordination programs. In addition to coordination between providers and facilities, participating oncologists must deliver 24/7 patient access to clinical support – support with real-time access to patient medical records. Cancer patients undergoing chemotherapy treatment experience an elevated rate of secondary hospital admissions and ED visits. It is expected that these traumatic and expensive encounters will decline as patients utilize around-the-clock clinical support.
The level of sophisticated coordination required is not possible without an integrated technology platform that provides everyone access to the same medical data whenever they need it. Care coordination is a foundational principle of successful bundles and will only increase in its necessity going forward. Health plans must invest in the technology that connects them to their providers, their providers to their patients, and everyone to the same, current information.

Meaningful Risk Structures

Understanding provider tolerances and capacity to bear risk, along with the unique relationship each one has with the health plan is essential to building bundles that work as intended. For example, risk sharing varies from full capitation, where providers accept all responsibility for risk, to fee-for-service where all risk falls to the payer. Analytics helps pinpoint the degree of risk that is acceptable to each provider, thereby enabling the creation of models that facilitate shared cost savings and provide meaningful incentives to improve care outcomes.

Initial and Ongoing Network Optimization

By using sophisticated analytics like Geneia LLC’s (Geneia) Theon® application, health plans can accurately evaluate their network to determine bundle viability – is the system capable of delivering all required procedures and services within the required timeframe? Analytics helps determine which aspects of a bundle any particular provider or facility can successfully deliver and how to design each bundle component to match. Further, analytics detects variations in care that impact patient outcomes and bundle profitability. Through bundles, health plans can align incentives for all participating providers to reduce care variations, control spend and recognize optimal shared savings.

After implementation, analytics continues to provide insight into provider and network performance as compared to benchmarks and peers. The ability to measure performance across utilization, outcomes and cost is invaluable for ongoing bundle success and future bundle design.

As value-based reimbursement models overtake traditional fee-for-service models, health plans and their provider networks must embrace strategies that demonstrate value. Bundled payments, like the CJR and OCM models, are here to stay; and more will come. Health plans and providers need to work together in partnership to deliver the required coordinated services to reduce medical expenses while improving care outcomes.


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