Bundled Payments Gaining Adoption; Provider Participants Seeking Care Redesign

With CJR beginning last April and BPCI being extended for two more years until 2018, bundled payments have established themselves as CMS options for value-based care programs. Adoption looks to continue upward for future years, though, a potential mass adoption could take place if a favorable, future MACRA decision determines that bundled payments qualify for “Advanced APM” status. Since bundled payments currently don’t qualify as such, only time will tell whether a future APM qualification could shoot bundled payments into a heightened level of popularity and adoption, advancing the course of its trajectory.

Thus far, CMS programs have generated substantial consideration for APM qualification under MACRA.  The reason bundles have not reached that level of qualification is due to bundles lacking two important measureable categories: Required use of EHR technology and payment based upon quality measures (See chart below). Perhaps, in the future, if bundles require increased EHR linkage and usage, as well as increased expectation and tie-in towards quality metrics, then bundles could potentially advance towards that desired advanced APM station.

In the meantime, those providers participating in bundled payments have focused on delivery features related to care redesign. Two reports have provided insight into how these providers have prepared and achieved success over the course of the past two years.

Through a NEJM Catalyst case study, Cleveland Clinic gained experience with bundled payments early.  Starting in 2013, Euclid Hospital was chosen to be the test site location to participate. Through Euclid’s experience, first year data demonstrated that hospitals could improve care and succeed financially under CMS BPCI Model 2 (30 day episode) for total joint replacement.

Evidence of success was remarkable for Euclid Hospital and Cleveland Clinic. As shown below, each key care metric improved significantly under the test case.

  • Average hospital LOS reduced from 3.4 days to 2.67 and 3.01 each quarter
  • 30-day readmissions decreased from 5% to between 1.6% and 2.7% each quarter
  • HCAHPS rating jumped from 74% to between 78% and 88% each quarter
  • The first year showed financial value creation of $522,389 (9.8%) across the 271 episodes of care

Similarly, UnityPoint Health Meriter Hospital used bundled payments to perform hip and knee procedures, in order to quicken the organization’s adoption towards value. Meriter, a 448-bed community hospital, started performing knee replacement procedures under bundles in 2012 and contracted with CMS to perform hip procedures through BPCI in 2014.

For UnityHealth and Meriter Hospital, cost savings were just as impressive, even though, quality improvements were not shared under this report.

  • For fiscal year ending December 2014, UnityPoint Health posted net revenues of $557 million
  • Meriter was UnityPoint Health’s strongest entity in 2014, posting net revenue at $405 million

These two case studies have offered common insights into how each successfully achieved savings (and improved quality for Euclid) through bundled payments, identifying what they did to prepare and how they executed against it. These common insights consisted of the following preparations:

  1. Developing and following evidence-based, best practice guidelines to ensure consistent, high-quality care for every episode of care.
  2. Using a care coordinator or care navigator throughout the continuum of care process, having them visit care sites and track patients.
  3. Integrating an electronic medical record system, connecting home health nurses, supporting care coordination and hospital discharge transitions
  4. Focusing on care transitions into the post-acute care setting to reduce fragmentation of care delivery.
  5. Establishing relationships with PAC facilities and working to create formal partnerships

These test cases have offered evidence for providers, that if appropriately prepared, each can perform bundled payments effectively and see cost savings while improving quality of medical services. Hospitals and physician groups can also exhibit increased efficiency, through fewer wasteful and unnecessary services given, forcing downward pressure on healthcare spending.  All of these achievements seem noteworthy and positive to attain.

At Leavitt Partners, we are focused on understanding and navigating the bundled payments landscape. At a recent Health Intelligence Partners (HIP) table top industry leaders discussed the impact of bundled payments and found consensus regarding three main points:

  1. The criticality of bringing cost and quality initiatives together concurrently
  2. The importance of bringing patients into the fold early to drive understanding before the episode of care begins to create a smoother path post procedure
  3. The best way to improve performance in a full risk environment is via improvements in each episode of care.

Bundled Payments