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Experience. Integrity. Advocacy.

Medicare Payment Initiatives Offer Good Opportunity to Try Out Bundled Payments


As the Centers for Medicare and Medicaid Services (CMS) continues to explore bundled payments through initiatives like the Bundled Payment for Care Improvement (BPCI) program and more recently the Comprehensive Care for Joint Replacement (CJR) initiative, a report by the American Hospital Association (AHA) says getting physician buy-in will be key to success.

“Participants need to educate physicians about bundling initiatives, identify physician champions to lead clinical process improvement efforts, and provide appropriate data, resources, and incentives to support progress,” writes Robert Mechanic, Senior Fellow Heller School for Social Policy and Management, Brandeis University, in the AHA’s January 2016 report.

Hospital participants also need to do the following to prepare for increased bundled payment initiatives, the report said: identify patients eligible for bundles early and assess their risk for complications, establish data analytic and information sharing capabilities, track patients across the continuum of care, redesign care, and coordinate care transitions and manage post-acute services.

Physicians, on the other hand, often have been hesitant about bundled payment arrangements for many of the reasons the American Medical Association lists on their website. Not only are bundled payments “a type of risk-contracting,” the AMA says, but they also raise many questions for providers, things like whether payment will be made to one entity and if so, how the physician will receive payment, what is the definition of “episode of care,” which providers are included in each bundle, how the risk adjustment is applied, and more. According to a December 2015 Fiercehealthcare article, an analysis of BPCI participation by Avelere health revealed that the greater the risk sharing, the more reluctant physicians are to participate in bundled payments.

In an October 2015 article, the Harvard Business Review explored two providers who have successfully entered into bundled payment arrangements: Hoag Orthopedic Institute (HOI), a specialty orthopedic hospital in southern California, and the Rothman Institute (RI), a private-practice physician group in metropolitan Philadelphia.

According to the article, the experiences of these two groups reveal three key components in successfully participating in bundled payments: “excellent data on outcomes and costs, proactive management of the patient, and alignment between physicians and hospitals.”

Related to that last point, the authors suggested that Medicare’s bundled payment initiatives might help foster such relationships: “physicians and hospitals that do not already have such organizational alignment can use their participation in the Medicare BPCI or CCJR programs to create financial arrangements between the parties that produce shared economic interests and accountability.”

Bundled Payment for Care Improvement

According to the CMS Innovation Center website, the BPCI initiative comprises four models of care, which “link payments for the multiple services beneficiaries receive during an episode of care.” Under BPCI, organizations accept payment arrangements based on financial and performance guidelines for each episode of care. The goal is higher quality care at a lower cost to the Medicare program.

BPCI is a voluntary program in which participants choose from among 48 episodes. It was introduced in two phases, and as of July 1, 2015, BPCI had 2115 participants in Phase 2, including 423 acute care hospitals, 441 physician group practices, 101 home health agencies, 9 inpatient rehabilitation facilities, 1 long-term care hospital, and 1,071 skilled nursing facilities.

Comprehensive Care for Joint Replacement Model

The CJR “aims to improve the care experience for the many and growing numbers of Medicare beneficiaries who receive joint replacements, making the patient’s successful surgery and recovery a top priority for the health care system” and will begin April 1, 2016. Unlike the BPCI, the CJR is a mandatory program for most hospitals in 67 geographic areas throughout the United States.

Under this model, the hospital where the hip or knee replacement and/or other major leg procedure takes place will be accountable for the costs and quality of related care from the time of the surgery through 90 days after hospital discharge. The hospital will then either earn a financial reward or, beginning with the second year, be required to repay Medicare based on quality and cost performance.

According to CMS, the CJR “gives hospitals an incentive to work with physicians, home health agencies, skilled nursing facilities, and other providers to make sure beneficiaries receive the coordinated care they need with the goal of reducing avoidable hospitalizations and complications.”

Ultimately, both programs have pluses and minuses, according to the AHA. But one big plus for both programs is that they provide a great testing ground to see whether or not bundled payments achieve the goals of higher quality and lower costs.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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