In health care, innovation can be defined as getting more value for less cost. And, at the beginning of last year, I suggested that the US Centers for Medicare and Medicaid Services (CMS) Innovation Center was one of health care’s innovators of the year. I said this because of the work that the Innovation Center has done to advance a game-changing payment model: bundled payments.
When I wrote that article, the Innovation Center had only implemented the Bundled Payments for Care Improvement (BPCI) program – a voluntary program that had 1,618 health care organizations participating targeting 48 conditions as of October 2015. But, only one year later, the Innovation Center has expanded that footprint. As of today, CMS has initiated mandatory bundled payment programs across the US, targeting four conditions: heart attack treatment, bypass surgery, surgical hip and femur fracture treatment, hip and knee replacements.
These models are no less than complex. To coordinate and manage the patient’s care and journey across multiple organizations, awardees must:
• Use an agreed upon care plan
• Engage the patient consistently
• Share clinical results
• Hit quality targets and service levels
• Reconcile the financial and payment amounts
As a sign of this complexity, under BPCI, many providers are working with third party organizations to help perform these required tasks. Many of today’s processes and clinical and administrative technology are not configured to support bundled payments. These so called “conveners” provide technical assistance to awardees to reduce the administrative burden on providers.
Based on a recent survey, Navigating bundled payments: Key strategies to reduce costs and improve health care, which Deloitte conducted with 20 health systems, conveners, technology companies, skilled nursing facilities (SNFs), and health plans participating in bundled payments, we’re seeing early results from this effort. We came out with three key takeaways from those interviews.
Invest in analytics and other technologies
Identifying the patients that are covered in a bundled program is the first step. Managing the physicians’ referral patterns, including the post-acute services, the clinical protocols for follow up, outcomes, and cost are all fundamental to developing a new best practice. These are all crucial to managing a successful bundled payments program according to the respondents. But, many organizations have found they have to do this on their own. Like the health systems implementing bundled payments, CMS is learning from implementation successes and failures and making adjustments to the BCPI program as needed. The organizations noted that continued communication and collaboration between CMS and health systems will be important. While it is largely understood that they should expect a lag time with CMS data, the organizations noted that having more data on a monthly rather than quarterly basis would help for planning purposes. Health systems have also found that having their own analytical capabilities or leveraging a technology company or convener is critical to identifying variation sources and savings opportunities.
Reduce use of SNFs
The interviewees widely agreed that most of the savings for orthopedic bundles have come from reduced use of SNF care. As a first step, many use detailed analytics to review utilization and outcomes across all the skilled nursing facilities in their market area. This can come in the form of avoiding the use of SNFs altogether or by shortening the length of time that patients spend in SNFs after they are discharged.
Engage the care team and patients
One of the core principles of alternative payment models (APMs) is aligning and engaging care teams to move away from the siloed approach typical of the traditional health care system. Health systems participating in bundled payments may need to be able to coordinate and manage care over different settings and over a longer time period. An engaged care team that can track patients, share care plans, and communicate with each other to achieve desired clinical and financial outcomes is a necessity under these models. It also means that educating patients and families early about their condition, the surgery or procedure they are going to have, and steps they could take to be as healthy as possible will likely be critical for success.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) makes these findings all the more relevant. Since MACRA enjoys bipartisan support, many in the health care industry have said that implementation is likely to continue under the new administration, further accelerating the adoption of APMs, including bundled payments.
Last year, I ended on a note that organizations that had not participated in BPCI would not have to miss out because CMS had begun to implement the mandatory bundles. There is some question as to what the nominee for Secretary of the US Department of Health and Human Services (HHS), Tom Price, will do once he is confirmed. Price has voiced opposition to these models. But, what he has voiced opposition to is the mandatory nature of the models – which means HHS may allow more flexibility. He has not indicated he would remove them entirely.
In Price’s testimony before the Senate Finance Committee last week, he said that he believed expanding innovation in health care is important. He also said that the Innovation Center is “the vehicle that just might do that.” My bet is that bundled payments may continue to be a part of the innovation toolbox that health care legislators and regulators will use as we find ways to deliver more for less – greater value for lower cost.