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So You’re Thinking about Bundling: Where to Start & With Whom

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May 15th, 2017

Bundled payments are a great option for organizations that are interested in taking on risk, but don’t have the appetite to form an ACO. Bundle payments group costs associated with a particular treatment or episode of care, offering health systems a longitudinal look at the care cycle that can help them efficiently allocate resources.

The CMS Bundled Payments for Care Improvement (BPCI) models have illustrated some success, prompting commercial entities to turn towards similar models to create savings. However, commercial entities that have invested in figuring out the nuts-and-bolts details of bundles—including actuarial science, potential partners, contract formats, episode targets—don’t readily share this information industry-wide. Health systems are looking for guidance on where, when, how, and what to bundle. They should start by evaluating what resources they have internally, where they have deficiencies, and what outside entities can help address those deficiencies.

Imagine you want to build a house. You might have the experience, the time, and/or the desire to build it yourself. You may also want to hire someone to create your plans or a construction company to actually build it. When creating bundles, health systems can enlist other organizations in similar ways. The three main groups of outside entities that can offer support tools are conveners, subcontractors, and episode groupers.

Conveners are end-to-end bundle designers. They first build the plan and then the clinical bundle, potentially taking on risk and taking some of the savings. Conveners are similar to a construction company responsible for building the entire house, overseeing what screws are placed where. They coordinate with health systems on the plan, and then carry out that plan.

  • Advantages: Peace of mind that they are going to take on the risk and build from beginning to end. Wide and deep health care expertise, requisite to build a complex bundle.
  • Disadvantages: Potentially less of an economic benefit because they might share in the profits. Organization might have less insight into the process because they aren’t as involved in the details.
  • Ideal for organizations that have a large amount of capital, such as Integrated Delivery Network (IDNs) and health systems.

Subcontractors are less hands-on than conveners. Like a builder may hire an electrician to wire a home, subcontractors can help health systems with specialized tasks (i.e., actuarial science behind the episode of care, defining the episode itself, identifying the specific clinical providers to include or exclude, etc.). They also offer specialization in a specific kind of bundle, such as how to implement an orthopedic or cardiac bundles.

  • Advantages: Specialized technical skills and/or expertise. Less costly relative to working with a convener.
  • Disadvantages: May not have a holistic understanding of your organization, instead focusing on the specialized task, creating a disconnect.
  • Ideal for an organization that possess many—but not all— of the competencies necessary to build a bundle.

Episode groupers are software tools that use predetermined decision logic to assign clinical costs and activity to clinically relevant episodes of care. Like architects, they help create detailed plans. These plans use analytics—including market costs—to determine what health systems need, but the grouper does not operationalize the bundle. Instead, the health system could either operationalize the plan itself or contract with a third party that is often the creator of the episode grouper.

Most episode grouper software sorts administrative claims data in to episodes of care. However, increasingly other sources of data, such as EHRs, are being factored into episode groupings.

  • Advantages: Less expensive and quick method to ascertaining specific costs and structure for a designated bundle.
  • Disadvantages: Comprehensive software-generated analytics may give health systems great information, but may not provide the nuance of operational requirements.
  • Ideal for organizations that may have more experience, confidence, or resources to create a bundle, but need isolated assistance with specific tasks or analytics.

Just like enlisting support from construction companies, subcontractors, and architects to build a home, these outside entities—conveners, subcontractors, and episode groupers—can help health systems create a strong bundled payment program.

Leavitt Partners is tracking how health systems are using bundled payments to move towards value-based care, increasing quality while decreasing costs. For additional Leavitt Partners bundled payments research, please refer to Bundles: Not Just for Your Cable and Internet and Bundled Payments Gaining Adoption; Provider Participants Seeking Care Redesign.

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