Industry Group Advises HHS to Expand Bundled Payment Models
One industry group is urging HHS to expand and develop more bundled payment models to include additional episodes of care.
By - The Center for American Progress (CAP), a Washington think tank, has called on the federal government to expand bundled payment models in order to further reduce healthcare costs and advance value-based care.
The letter to Department of Health & Human Services Secretary Sylvia Burwell commended the federal agency for Medicare’s mandatory bundled payment program for joint replacements and asked HHS to develop similar demonstrations.
“In the remaining months of this administration, we urge you to initiate several additional mandatory bundled payment demonstrations,” wrote CAP representatives.
“Additional mandatory demonstrations would send an important signal to stakeholders—hospitals, physicians, device manufacturers, skilled nursing facilities, and home health care agencies—that Medicare plans to aggressively expand bundled payments alongside other payment reforms.”
CAP explained that bundled payment demonstrations can ensure healthcare savings by discounting fee-for-service payments as well as delivering short-term savings for specific treatments. The letter also stated that bundled payments can be used across all types of providers in any geographic location.
These benefits could justify nationwide expansion of this alternative payment model, wrote CAP representatives.
The nonpartisan group also suggested that HHS develop a bundled payment initiative that targets cardiac procedures, including coronary artery bypass grafting, stent placement, cardiac catheterization, pacemaker placement, and management of congestive heart failure.
Under the potential program, the letter reported that Medicare could further decrease healthcare spending while improving care quality like with the Acute Care Episode Program, a bundled payment initiative established in 2009 for orthopedic and cardiac surgery.
“Results from the Acute Care Episode Program suggest that both providers and the Medicare program can realize savings and quality improvements by aligning hospital and physician interests and allowing both to share savings that result from delivery of high quality, more efficient care,” wrote CAP.
A cardiac-specific bundled payment program would also address healthcare cost variations in Medicare spending for coronary artery bypass grafting procedures, explained the letter.
CAP cited a study that found a $23,833 difference in Medicare spending for coronary artery bypass grafting services between hospitals in the highest- and lowest-cost quintiles, representing a 70 percent difference. A bundled payment program could help Medicare spending, stated CAP.
The mandatory demonstration for cardiac procedures should include post-acute care in the bundles and 90-day guarantees, the letter reported. By including post-acute care, the program would incentivize providers to improve patient outcomes beyond the specific treatment.
Additionally, the letter applauded HHS for existing mandatory bundled payment demonstrations, like the Comprehensive Care for Joint Replacement Model. These alternative payment arrangements have encouraged all providers to cut healthcare costs and improve quality care, explained CAP.
“This step was necessary to ensure that participants in a demonstration are not only those providers that believe they will financially benefit from participation,” the letter stated. “All providers will have the incentive to re-design their processes of care to improve quality and lower costs.”
“In addition, this demonstration will accelerate expansion of bundled payments at the same time that the administration continues to test and refine other payment models.”
CAP’s letter comes a couple months after the Centers of Medicare and Medicaid Services (CMS) announced that some healthcare organizations can extend their participation in the Bundled Payments for Care Improvement program, which provides bundled payments for 48 clinical episodes.
The program was scheduled to end on September 30, 2016, but providers can now continue to take part until the end of September 2018.
CMS extended the initiative to evaluate the alternative payment model’s effectiveness in promoting value-based care and decreasing healthcare costs.
“By focusing on outcomes for an episode of care, rather than separate procedures in care delivery, we are incentivizing hospitals, doctors and other providers to work together to provide high quality, coordinated care for patients,” said Patrick Conway, MD, CMS Acting Principal Deputy Administrator and Chief Medical Officer, in a press release last year.
Despite slower adoption of this alternative payment model, some stakeholders are predicting bundled payment arrangements to gain popularity, especially with upcoming MACRA implementation.
While the proposed MACRA rule would eliminate the Sustainable Growth Formula, providers would be incentivized to participate in an alternative payment model, such as accountable care organizations (ACO).
However, bundled payment models require less risk than ACOs and other value-based care structures, which could lead to more participation.
Many healthcare providers are experiencing challenges with fully implementing value-based care models, especially in the next couple of years. But, bundled payment structures provide healthcare organizations with a method for moving some episodes of care to an alternative payment model while still reducing healthcare costs and improving care quality.
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