4 Questions to Ask to Help Maximize Bundled Payment Savings

DATE: 05/20/2019

The Data-Driven Mindset

As any bundled payment program veteran can tell you: you can’t do well in one of these programs if you’re not willing to make some changes to how you manage care. To maximize bundled payment savings, participants must base their decisions on data. This data-driven mindset should be at the core of all strategies.

To that end, we’ve put together several key questions that should help guide your strategy. How would you answer these questions?

1. Have you reached critical mass?

If you have a few episodes in a bundled payment category, one costly episode can wipe out the savings you’ve achieved across a dozen others. You have to have a high enough volume of episodes to protect you from that kind of variation. Beyond that, there are additional benefits to having a large episode volume—you can identify care patterns across your population and apply more meaningful investments into care management and redesign activities.

2. Do you know the fixed and variable costs of an episode?

In acute care bundled payment episodes, the acute DRG payments don’t change—these are your fixed costs. However, bundled episodes also include post-discharge treatment, which is where most of the variable costs of an episode come into play, and the ratio of these costs to the fixed costs can vary depending on the type of episode. If your variable costs are a small proportion of the overall episode, you may find it especially challenging to meet your targets.

3. Do you understand what’s driving costs after discharge?

When you look at the cost per episode of one DRG, you’ll likely see low-cost episodes, high-cost episodes and hopefully a good number in the middle of those. That’s where you likely have post-acute care utilization with the most opportunity for cost savings. Identifying where it’s clinically feasible to reduce discharges to PAC institutional providers, redirect to a lower-cost PAC provider, and/or reduce the level of service of the current PAC provider type are key strategies for controlling those costs.

4. Do you have strategies to reduce readmissions?

Reducing acute readmissions is one of the strongest ways to maximize your success rates in bundled programs—but before you can reduce them you need to know why, where and at what point in the episode are the readmissions happening. You need to know if readmissions are coming back to your own organization or if patients are being readmitted outside of your organization. Knowing the ratio of those is important, especially if the majority are coming back to your own organization. In that case, reducing readmissions equates to a reduction in your inpatient volume, which in turn creates downstream effects for which you need to be prepared.

The Right Data

The key to answering all of these questions effectively begins with the right data. Getting to a yes in bundled payment programs requires in-depth volume and population metrics, coupled with strong cultural, clinical and operational readiness. Data must serve as the backbone of creating informed, clearly defined strategies in response to the questions above and fuel your success in the programs.


Click here for your copy of 4 Questions to Ask to Help Maximize Bundled Payment Savings. To learn more about what DataGen is doing to simplify the complexities of healthcare payment reform change, contact DataGen and follow us on LinkedIn.