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Three Tips for Providers Following the Bundled Payment Delay

DATE: April 14, 2017

What can you do while CMS decides how to handle the mandatory program?

As the healthcare community continues its march away from fee-for-service models, bundled payment initiatives have risen in popularity—thanks in no small part to their ability to fuel cost savings and significantly improve care outcomes.

The Centers for Medicare and Medicaid Services (CMS) issued an interim final rule in March that delays implementation of the new bundled payment model for heart attack and cardiac bypass surgery services; expands the existing Comprehensive Care for Joint Replacement bundling model; and implements a new cardiac rehabilitation incentive payment model, from July 1 to October 1, 2017.

Prior to the interim rule, CMS’ push forward on bundled payments focused the industry on episodic efficiency. The delay has pushed these initiatives back three months and is causing confusion and worry among participants.

Benefits of the delay

Despite Health and Human Services Secretary Tom Price’s negative statements about mandatory bundling initiatives, the delay has some benefits. Stakeholders across the industry will have more time to assess the efficacy of the program and provide comments to CMS. In addition, Secretary Price and others hope to align the payment periods with the calendar year. Providers can use this opportunity to better prepare for the program’s official start.

Will value-based care survive this overhaul?

Patrick Conway, Chief Medical Officer at CMS, has indicated that early findings around bundles are “encouraging,” but more data are needed to fully assess their impact on costs and quality. This validates CMS’ plans to test pilot bundles.

Industry experts think there is little reason to worry that bundled payment programs and other quality payment programs, such as those under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), are in danger of being decimated. The fact that MACRA was passed through a bipartisan vote indicates that Republicans and Democrats understand that there is a need to lower spending and shift away from fee-for-service toward value-based care. However, experts believe there might be a shift from mandatory bundles to voluntary bundles as it facilitates increased provider participation.

What should participants do now?

  1. Provider organizations that had previously expressed concern about the accelerated pace of the program can leverage this extra time to strengthen engagement with their patient populations.
  2. Hospitals that will be participating in these programs can begin implementing test strategies to understand what would drive bundled payment profitability. Some factors to consider:
    1. Program costs: These would include staff, marketing outreach to physicians, and information technology improvements.
    2. Price discount: Providers may have a false sense of confidence if their historic spend is commensurate with the region rather than above that region. However, with a discount factor of 3% taken to calculate targets, those providers are already behind.
    3. Gainsharing: While gainsharing is not allowed outside of the waivers in CMS’ bundling programs, providers can begin defining and discussing the parameters of a successful arrangement. Savings can be split by creating gainsharing incentives among the different stakeholders across the continuum. This will allow physicians to collaborate on the modalities they use to treat their patients.
  3. Though it may be a long process, providers should begin educating senior leadership and setting appropriate expectations. While the concepts sound simple, in-depth exposure and discussion is needed to truly understand the implications of these new rules.

At the same time, the CMS Innovation Center can use this extra time to test and evaluate these innovations in care delivery and payment and determine whether modifications are needed. CMS can also continue to examine the effectiveness of both mandatory and voluntary bundles to observe which route promotes increased participation and better incentives.

The delay raises several questions about what value-based care will look like under the Trump Administration. Even though it gives more time to stakeholders to review and test these programs comprehensively (and hopefully increase the chances of success under this model), it also could impede innovation, which would further drive up healthcare costs. We hope the latter is not the case.

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