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Current Trends in Bundle Payments

Posted by Frank Ripullo on Mon, Dec 19, 2016 @04:12 PM

At EHM, We Work with Suppliers Dealing with the Reality of Bundle Payments

Bundle payments are designed to focus on quality of care versus quantity. Providers are awarded based on outcomes. Suppliers are showing they care by helping providers through the creation of data services to help improve the process.

Do Suppliers Need to Care?

You may be familiar with a hospital system that sets a fixed price for the supplies they need for lower extremity joint replacements. In these instances, the hospital’s physician network would accept or challenge the scenario.  These doctors expected to share risk under the bundle payment model are the very doctors that bring in the orthopedic cases. Champions of particular products will have difficulty switching based on cost. The risk to publicly-traded suppliers is protecting their ASP. These types of suppliers require price protection.

Bundle Payments

Abandoning the traditional fee-for-payment model, bundle payments were first proposed by Centers for Medicare and Medicaid Services (CMS) to encourage both providers and physicians to work together across the continuum of care thereby sharing risk by providing all services using a new kind of reimbursement model. This strategy of value-based care has been adopted by many hospitals across the nation. While there is support for value-based payments, it remains an “act of faith” until enough data becomes available to observe clear outcomes.

But is this Model Fair to Healthcare Organizations?

On November 1st, Republicans made clear their position on the mandatory value-based payment models. According to Becker’s ASCReview, in a piece titled, “House Republicans to CMS: ‘No’ to mandatory value-based payment models,” Republicans argued that the payment model overstepped the authority of CMS and that the models lack information regarding provider practices leaving organizations vulnerable. Read more here They question the effect the payment models will have on patient care.


Past and Future Trends?

 “The concept of value in healthcare has been around a long time…fundamental ideas like the importance of transparency and data to patients, providers and competition existed well before the Affordable Care Act, and they are as Republican as they are Democratic.”

                                                                        Helen Darling, National Quality Forum

Many are wondering how President-Elect, Donald Trump will handle the ACA and its affiliated programs. Clearly, The Centers for Medicare and Medicaid Innovation, the developer of the models, has received criticism for rushing the implementation of the payment models with warnings that the program is moving too quickly without enough information. Are bundled payments the right option or is there a better way? One thing we can all agree on is that hospitals need well-interpreted information so that they can ascertain their financial risk. The data should lead them to optimal pricing. They need to be able to design programs that align doctors and patient care to meet their objectives. Hospitals, doctors, and post-acute care facilities must find a way to collaborate to improve patient outcomes while optimizing the delivery of care. For hospitals, this is undoubtedly at the forefront of their concerns. We can only hope that improving efficiency will improve quality of care.

Bundle Payment Bright Spots

There is a bright spot for value-based care, according to an article in the October issue of MD+DI, Read full article here that explains how orthopedics companies are adapting the new reality of bundled Medicare payments for hip and knee replacement procedures.  In April, over 800 hospitals were affected by CMS’s Comprehensive Care for Joint Replacement (CJR) model. The model encourages hospitals to work with providers and acute care facilities to reduce infection and implant failures, thereby reducing readmissions.

 Generally, bundle payments:

  • Emphasize value over volume
  • Offer care at a predetermined cost, both hospitals and physicians deliver all services per patient, per episode over a determined period up 120 days, depending on the care needed
  • Share financial risk since the bundle payment covers costs including postsurgical infections and readmissions
  • Current bundled payment programs focus on acute care episodes
  • For an episode of care for one year, health plans may offer bundle payments for treating patients with asthma, cancer and diabetes

What hospitals need:

  • valuable data to decipher metrics that support the bundle payment model
  • ways to reach goal of simultaneously improving care and cutting costs

For providers to know how to manage this shared risk is no easy task.


The Challenge

Collecting the data and building the data systems needed to pull out quality metrics on individual physicians or physician groups for bundled payment is a challenge.  

The task of alleviating this cumbersome process has been tackled by a handful of manufacturers.  The need for hospitals to examine data to make the program work was apparent early on. In a 2013 article in Hospitals and Health Networks Read more here, setting a bundled price on an episode of patient care requires much research and is complex since “administrators and their physician partners must collect reams of patient data, spend hours identifying best practices and develop teams of clinicians to run these programs.”

Companies like Stryker and ZimmerBiomet are offering services to help improve patient care and reduce hospital readmissions.

Stryker, for example, has expanded its patient-centered digital platform, Joint COACH to include, Episode Performance Manager offering hospitals hip and knee replacement data garnered from CMS’s raw data claims. The process involves:

  • Examining a hospital’s current episode cost vs target CMS price
  • Determining percentage spent on post-acute care
  • Percentage of patients discharged to homes or home healthcare
  • Readmission rates

These metrics are used to compare to the hospital’s baseline data.

ZimmerBiomet added Signature Solutions, combining ZBH’s consulting services with clinical services and technologies. And companies like Smith & Nephew are extending bundled offerings that promote savings with better outcomes such as a decreased incidence of infection.

GPO Resources

Premier’s response to bundled payments includes providing members with a proprietary Bundled Payment Intelligence Platform (BPIP) which provides members with data that leverages CMS data along with that of their members that are dispersed throughout the country, spanning almost every state. In a recent webinar, Bundled Payment Analytics Deep Dive, Premier reviewed their bundle payments initiatives recommending that hospitals become familiar with the various bundle programs, citing the forthcoming new voluntary program, as well as the current, Bundled Payment for Care Improvement Initiative, PCI, Comprehensive Care for Joint Replacement, Accountable Care Organizations, MSSP.


Tags: Bundled Payments