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Premier: Bundled Payment Models Should be Voluntary Nationwide

In a letter to CMS, Premier offered bundled payment model development suggestions, such as care episode, target price, and program overlap management changes.

Medicare bundled payment models should be voluntary for all providers in the country, Premier suggested to CMS

Source: Thinkstock

By Jacqueline LaPointe

- Premier Healthcare Alliance recently offered CMS several recommendations for bundled payment model development, including making programs voluntary for providers across the nation.

CMS has implemented several mandatory bundled payment models during the Obama administration, such as the Comprehensive Care for Joint Replacements (CJR) program and Episode Payment Models (EPMs) that cover acute myocardial infarctions, coronary artery bypass grafts, and surgical hip and femur fracture treatments.  However, the compulsory models have recently come under scrutiny.

Under the Trump administration’s regulatory freeze, the Department of Health and Human Services (HHS) delayed the effective date for EPMs moved from February 18 to March 21.

Newly-selected HHS Secretary Tom Price also criticized CMS in fall 2016 for overstepping its authoritative power by implementing compulsory alternative payment models, such as the CJR.

In its recent letter to CMS, Premier agreed that Medicare bundled payment models should be voluntary to give providers flexibility with selecting the most appropriate programs. In addition, the organization suggested that future bundled payment programs build on the BPCI Model 2.

READ MORE: Understanding the Basics of Bundled Payments in Healthcare

Through the BPCI, providers choose to enter payment agreements that make them accountable for the cost and quality of care episodes. The model contains 48 care episodes and four payment tracks with differing financial risk levels.

Premier stated that the BCPI’s second payment track is an appropriate bundled model template because the model includes a retrospective reconciliation of prices and care episodes that span an inpatient stay plus a post-discharge period.

While the BCPI’s second model serves as template, the organization also offered several other voluntary bundled payment model suggestions relating to care episode definitions, target prices, and program overlap.

Modify bundled payment model care episode definitions

First, Premier advised CMS to develop a voluntary bundled payment program that is available nationwide.

CMS required prior models to be implemented in certain regions to test the model’s effectiveness. However, Premier argued that making bundled payment models accessible to providers across the country would encourage more providers to join alternative payment models for Quality Payment Program participation.

READ MORE: How to Address Bundled Payment Cost Reduction Challenges

Eliminating regional confines would also prevent market distortions. Some competitors may reside in the same market for healthcare services even if they are in different states. Therefore, if one provider is in a state with the bundled payment model, his competitor in a non-participating state would be at a disadvantage.

Second, Premier recommended that all providers involved in the care episodes should be considered accountable entities under the bundled payment model. Imposing accountability on all providers should motivate participants across the care continuum to make care delivery more valuable.

“In our experience, episode initiators who assume the majority of the risk of the episodes in which they participate are maximally invested in care transformation and the program overall,” wrote the organization. “Providers contracting with risk bearing awardee conveners have little incentive to fully engage in true care delivery innovation as they do not bear the risk.”

Third, a voluntary bundled payment model should include flexible care episode selection. CMS should continue to permit providers to choose care episodes as well as allow them to add or remove episodes on an annual basis.

If CMS moves forward with mandating certain care episodes in voluntary programs, then the federal agency should only require providers who have sufficient case volumes to engage with the mandatory episode.

READ MORE: What Does the Rise of Bundled Payments Mean For Providers?

Fourth, CMS should limit a participant’s accountability to just 90 days per episode. Ninety days is an appropriate episode duration because the period allows providers to track complications and engage providers across the care continuum.

Episodes longer than 90 days venture into the population health management area, which should be handled by accountable care organizations, Premier argued.

Fifth, Premier supported the federal agency’s use of Diagnosis-Related Groups (DRGs) to identify care episodes. However, the alliance called for further study on using ambulatory triggers to define a care episode before a hospital admission.

Refine bundled payment target price determinations

CMS should make several target price calculation modifications to ensure that providers can meet episode cost expectations, Premier continued. CMS lowers target prices over time to make care delivery more efficient, but continuously decreasing cost benchmarks may create a “race to the bottom.”

Regularly lowering target prices will challenge providers to be more efficient. But once maximum efficiencies are implemented, the provider may still need to work to lower costs to meet model benchmarks.

To prevent this race to the bottom, Premier advised CMS to either incorporate repayments into target price determinations or set the benchmark at the higher of the provider-specific or regional average episode payment amount.

Bundled payment target prices should also remain constant for the first one to two years of participation to allow providers time to align care delivery with bundled payment model goals.

Additionally, Premier suggested that CMS limit regional pricing in cost benchmark calculations. Recent Medicare bundled payment models use a blend of regional and provider-specific pricing data to determine target prices. CMS also intends to up regional pricing weights over time in several models, such as the CJR and new EPMs.

The alliance encouraged the federal agency to only use 75 percent of regional pricing data for target price calculations to ensure that providers are not penalized for factors beyond their control that contribute to higher costs.

“While a blend of historical and regional pricing may present a tenable pricing model for elective conditions for some institutions, such a model could create serious issues if applied to medical conditions such as coronary artery disease,” Premier wrote. “Bundled payments for such conditions vary drastically both within and between different providers’ patient populations.”

Address bundled payment model and other Medicare program overlaps

Some Medicare value-based reimbursement programs overlap, causing confusion for many providers. For example, some accountable care organizations (ACOs) stated that bundled payment models oftentimes conflict with their ACO programs. Under some bundled payment models, ACOs lose their financial responsibility for attributed beneficiaries because they are shifted to the other model.

Premier called on CMS to continue to address bundled payment model and ACO conflicts. The federal agency should implement sharing agreements between ACOs and episode initiators in any new voluntary bundled payment models, like in the CJR.

CMS should also study how bundled payment model and ACO compensation works together. The alliance suggested a voluntary demonstration that reimburses primary care providers a monthly capitated payment for evaluation and management services. While the capitated payment would be included in ACO actual expenditures, any specialist acute care needed would fall under the bundled payment model.

CMS should also mitigate program overlap between mandatory and voluntary bundled payment models, Premier stated.

Only providers in select areas can participate in most required Medicare bundled payment models. But if the federal agency develops a nationwide voluntary program, then it should limit conditions covered by mandatory models to locations where the mandatory models are not required.

Any compulsory bundled payment models should also take precedence over voluntary programs, the alliance added.

Additionally, some Medicare bundled payment models contain provider and beneficiary overlap.

In terms of provider overlap, bundled payment models automatically attribute the care episode to a physician group bundler even if a provider who is part of a hospital bundler is involved in the episode. The provider attribution methodology puts hospitals at a disadvantage and promotes physician groups to participate in the model without hospitals, resulting in increased fragmentation.

“We believe a more equitable process to attribute the patients to a bundler would be to consider the role of the physicians who are part of the hospital group compared to those of the physician group, or developing a plurality of services model more closely aligned with MSSP [Medicare Shared Savings Program],” wrote Premier. “Regardless of the method, hospital groups should be allowed as conveners and put on an equal playing field with physicians.”

Some providers also experience beneficiaries who can be attributed to more than one care episode or payment model. To mitigate beneficiary attribution confusion for providers, CMS should either allow beneficiaries to be counted in two care episodes at the same time or give precedence to mandatory bundled payment models.

In addition to offering care episode, target price, and program overlap suggestions, Premier also developed 17 quality measurement tenets that CMS should follow when developing voluntary bundled payment models as well as 5 payment and legal waiver recommendations.

Through the comprehensive list of voluntary bundled payment model development ideas, the alliance intends to help CMS create new programs that better support providers as they transition to value-based care.


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