Value Based Care: What New can Bundled Payments Bring to the Table

Abhinav Shashank
Wed 23 January 2019

The move to value-based care is not happening a year from now, or in a month, or even tomorrow. It’s happening as we speak.

Why do I say that? An analysis from the Health Care Payment Learning & Action Network (HCP-LAN) in October 2018 revealed that 34% of healthcare dollars of 2017 flowed in from Alternative Payment Models (APMs), which is a steady increase from 23% two years ago.

As more dollars move out of fee-for-service and into value-based reimbursement models, we’re seeing some payment models emerge as predominant ways of healthcare reimbursement. Naturally, Bundled Payment for Care Improvement (BPCI) seems like the next step in a steady march.

What constitutes BPCI Advanced?

Stemmed from the old BPCI, BPCI Advanced is generating positive results by speeding up the shift to value-based care.

BPCI Advanced includes 29 inpatient clinical episodes and 3 from outpatient settings; this is in contrast to 48 total bundles in the old model. As an Advanced Alternative Payment Model under the Medicare Access and Children’s Health Insurance Program Reauthorization Act (MACRA), BPCI Advanced offers a key opportunity for healthcare organizations to generate revenue through a 5% bonus payment.

The early enrollment has been robust, with the October 2018 launch of the program resulting in 1,547 hospitals and provider groups signing up for it. The top three clinical episodes selected by providers included major joint replacement of the lower extremity, congestive heart failure, and sepsis.

BPCI Advanced holds providers accountable for quality and costs of care across a defined episode comprising of either hospitalization or a procedure and 90 subsequent days. More than 1,500 participants volunteering to join the program is a strong indication of provider willingness to take on bundled payment and the potential to improve the value of care provided.

Compared to its predecessor, BPCI Advanced comes with a set of rules that are slightly more sophisticated and strict, especially when it comes to how bundles are priced. In BPCI Advanced, CMS has capped the potential loss at 20% of providers’ program size.

Why isn’t it mandatory participation?

Moving from fee-for-service payments to compensation based on the totality and quality of care has been a subject of boardroom and water cooler discussions since long before the term ‘APM’ existed.

But forcing providers to participate in APMs will do little to incentivize them to drive changes in care delivery and control costs. APMs were launched in the US healthcare to reduce spending, and mandatory models could come with serious shortcomings. Highest among them is the fact that the models, at an early stage, have no guarantee if they will achieve the desired result or would plunge down with unintended negative consequences. Additionally, mandatory APMs would put providers on the line for patient behavior which may be outside their control.

Here’s how BPCI differs with its involuntary participation. It’s one of the programs that allow providers to be in the driver’s seat, leading the redesign of care. BPCI gives providers the flexibility, scale, and brackets of risk they can accept, and gives them a lot more control over what providers want to manage.

As of now, CMS has allowed providers an option to retrospectively withdraw all or some episode initiators and/or clinical episodes in March 2019. Once this open enrollment closes, there will be no opportunity for participation until 2020.

Could this be a game changer?

Let’s admit it: we have multiple payment models around us, and healthcare providers are not accustomed to rapid change and tend to be risk-averse, but their tendency to be shy of assuming risk is in direct opposition to how their incentives are changing.

The value in care is achieved through different levers and in the case of BPCI, most of these levers are around effective care management. In addition to assessing the quality of patient outcomes and patient experience, BPCI looks for unintended consequences for their patients. BPCI encourages hospitals and provider groups to create ‘care pathways’ to make sure their patients receive appropriate care after an episode and that they reduce post-acute facility utilization and readmissions.

Additionally, BPCI could also breed some process improvements such as efficient care processes. Apart from the fact that BPCI encourages providers to develop a strategic approach to care management, it also allows providers to engage convening organizations to help manage their participation in the program. A convener typically provides expertise and guidance into selecting an episode and analytic tools to improve the provider’s visibility into their performance and likelihood of success.

How to generate success in value-based care with BPCI?

With fee-for-service, a hospital CFO would install an MRI machine and would want as many people to have an MRI as they could in order to get more and more throughout. With this new paradigm of value-based care, CFOs think more along the lines of “No need to put anyone through that machine unless they absolutely need to go.”

But how do we know that? How do we know the best practices to manage the population? On what exactly should our decisions be based?

1. Data-driven decision capabilities to pick a bundle

An integration of claims and clinical data is extremely instrumental in understanding the overall picture of the network and identifying the growth opportunities in their network. Data-driven insights would assist providers in narrowing down to issues such as long wait times, excessive facility utilization, episode-cost variation, and such variances. With these insights at hand, providers would be able to pick the bundle suited to their network and learn how they could maximize their outcomes.

2. Classifying episodes based on risk

Providers should closely consider the risk each episode poses before they pick it and negotiate their benchmark prices. For example, elective knee surgery patients represent a lower risk compared to those with fractures, so the bundles should be priced accordingly. Also, providers should use predictive analytics to target patients with chronic conditions or comorbidities.

3. Undertaking a patient-centric approach

While identifying the most promising bundle, providers also need to analyze their patient population to find the patients that would qualify for a bundle. On top of that, providers need to develop a dynamic yet firm approach to manage their patients’ care journeys after they’ve been discharged. Care teams should have automated workflows to monitor the progress of their patients during the 90-day period instead of a completely manual time-consuming process with a larger margin of error.

4. Keeping out-of-network activities to a minimum

It is possible that patients could go to a different provider to seek the care they need and it’s difficult to manage patients who go out-of-network during this 90-day period. Providers need to have efficient referral management in place that could help them identify the best suggestions for specialists to direct their patients. Additionally, providers can narrow down on network leakages based on a close analysis of patient activity and network performance based on historical claims data.

5. Creating a real-time data infrastructure

Providers need to develop an infrastructure that enables data exchange in real time to allow appropriate provider collaboration. Having access to data such as LOS, patient care progress, and cost impact throughout the span of time for an episode offers a bunch of learning opportunities. Using these insights, providers could develop care plans that prioritize patient wellness and aims to reduce the time in care facilities.

The road ahead

BPCI is an excellent segue into value-based care, and more importantly, it focuses on coordinating care for a patient across episodes of care. It’s an opportunity for providers to deliver better care to their patients with smarter spending. The fact that it is a voluntary model as well will allow for faster progress toward higher quality, more affordable healthcare. By driving success in this model, providers can enhance their relationship with their patients and solidify their presence in the healthcare space. When these win-win-win situations are created, only then will everyone be able to work together toward the same goals, possibly bend the healthcare cost curve, and make lives healthier.


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