Incorporating Population Health in Next Gen of Bundled Payments

June 01, 2017 - The next generation of bundled payments should focus on population health management, researchers recently argued in a Journal of the American Medical Association report.

Bundled payment models can align with population health management by extending the care episode duration, making providers outside of the hospital accountable, and integrating with global budget models within accountable care organizations (ACOs), the four authors stated.

The authors from the Corporal Michael J. Cresencz VA Medical Center, Perelman School of Medicine, Massachusetts General Hospital, and Leonard Davis Institute of Health Economics pointed out that existing bundled payment models suffer from several limitations. The alternative payment model is based on a fee-for-service payment structure and they incent providers to select the healthiest patients for care to avoid high healthcare costs.

To improve bundled payments, researchers claimed that aligning the alternative payment model with population health management would promote high-value, cost-efficient care.

Healthcare stakeholders can create bundled payment models that incorporate robust population health management by first extending care episode durations to one year.

READ MORE: Bundled Payment Models Here to Stay Despite CMS Program Delays

Traditional bundled payment models cover a care episode that encompasses a hospitalization and 90 days post-discharge. The short care episode definition limits the model to conditions that can be appropriately treated over just 90 days.

“Extending the bundled payment to one year or more would allow for a broader set of conditions to be included, moving beyond procedures toward the inclusion of longitudinal care,” the report stated.

For example, researchers suggested a maternity bundled payment model that could cover prenatal, delivery, and subsequent neonatal care.

Bundled payments targeting chronic disease management would also be feasible under longer care episode definitions. The bundled could span physician visits, laboratory measurements, diagnostic services, medications, therapeutic procedures, and related hospitalizations.

Lengthening care episode definitions may also mitigate the negative effects of current bundled payment models. A one year bundled payment would not incentivize providers to avoid medically complex patients who are at a higher risk for short-term negative patient outcomes.

READ MORE: Key Considerations for Bundled Payment Model Adoption, Success

Low-value resource use may also decline under the longer bundled payment model. Providers would have the financial incentive to order tests and prescribe treatments with long-term benefits rather than procedures that ensure patients avoid a hospital admission for the next 90 days.

In addition, the longer bundled payment could promote care coordination among primary care providers and specialists. For instance, providers accountable for the episode costs of an acute myocardial infarction patient would be incentivized to provide primary care follow-up during the post-acute care phase.

Second, researchers advised stakeholders to expand bundled payments to providers outside of the hospital to align the payment structure with population health management.

Bundled payment models traditionally start with a hospitalization. As a result, many of the models target inpatient providers and hospital services for healthcare cost reductions.

However, allowing providers in the outpatient setting, such as those in primary care, health centers, and ambulatory surgery centers, could efficiently reduce healthcare costs by shifting care out of the expensive hospital setting.

READ MORE: Exploring Two-Sided Financial Risk in Alternative Payment Models

Stakeholders should look to Medicare’s Oncology Care Model as an example. The bundled payment model permits outpatient oncology practices to take on the clinical and financial risk for a chemotherapy episode.

Similar bundled payments could target other expensive hospital services, such as hip replacements. By allowing ambulatory surgery centers to take on risk, providers would be incentivized to shift the surgical procedure to the cheaper healthcare setting.

Third, the next generation of bundled payment models should integrate with ACO programs, the researchers suggested.

Aligning ACO and bundled payment models may realize greater healthcare cost savings. Medicare ACOs have seen more success with reducing acute hospital and outpatient physician costs, while Medicare bundled payment models saved more on post-acute care costs.

However, the alternative payment models have historically clashed under current Medicare reimbursement policies. The National Association of ACOs (NAACOS) advised CMS in 2016 to resolve financial conflicts between the alternative payment models. They claimed that ACOs tend to lose revenue when providers participated in bundled payment models because the bundler took on financial responsibility for the patient.

The care episode was then set at the bundled payment’s target price, which usually differs from the ACO financial arrangement for population health management.

Recently, the organization further urged CMS to indefinitely suspend upcoming mandatory bundled payment models for cardiac and orthopedic care episodes until the financial conflicts are solved.

Researchers in the JAMA report recommended that stakeholders align incentives and proactively distribute information on shared beneficiaries to integrate bundled payments and ACOs. They suggested that payers account for care episodes involving ACO patients in the bundled payment model by incorporating the actual episode costs for assigned beneficiaries within the ACO’s global expenditures.

Stakeholders should also preserve facility payment discounts in hospital-specific bundled payment models in ACO global budget determinations, they added. Thus, the healthcare organization could share in the savings for both alternative payment models.

“Testing bundles nested within overarching collective accountability through bundle-ACO integration is particularly promising,” the report concluded. “There will be ample opportunity to inform bundle design based on findings from voluntary and mandatory Centers for Medicare & Medicaid Services programs and private insurer initiatives.”

“Innovations in bundled payment design could increase their attractiveness to commercial and public payers alike in the pursuit of higher-value care,” they continued.