Tuesday, 27 September 2016 05:56

Cautious Optimism Abounds over Bundled Payments

Written by Mark Spivey

m spiveyThe Centers for Medicare & Medicaid Services (CMS) is lauding the benefits of the newly widespread use of bundled payments in the wake of a new report, but lingering uncertainty remains regarding just how helpful they can be.

CMS released the report last week, marking the agency’s second annual evaluation for Models 2-4 of the Bundled Payments for Care Improvement (BPCI) initiative, according to a press release quoting CMS Acting Principal Deputy Administrator and Chief Medical Officer Dr. Patrick Conway.

“Patients want the peace of mind that comes with knowing they will receive high-quality, coordinated care from the minute they are admitted to the hospital through their recovery. Bundling payments for services that patients receive across a single episode of care – such as a heart bypass surgery or hip replacement – encourages better care coordination among hospitals, doctors, and other healthcare providers,” Conway said. “Providers participating in bundled payments must work together when patients are in the hospital as well as after they are discharged, which should improve their recovery and avoid preventable complications and costs by keeping people healthy and at home.”

Conway noted that CMS first proposed new bundled payment models last summer as part of an effort to “continue the Administration’s progress to shift Medicare payments from rewarding quantity to rewarding quality by creating strong incentives for hospitals and clinicians to deliver better care to patients at a lower cost.” The proposal followed the implementation of the Comprehensive Care for Joint Replacement Model, which took place earlier this year, introducing bundled payments for certain hip and knee replacements.

“Doctors, patient advocates, and healthcare experts across the country support these models because they have seen firsthand their potential for delivering better quality and more cost-effective care. Public and private-sector bundled payment models have already shown promise in improving patient outcomes while lowering costs, including for cardiac and orthopedic care,” Conway added. “In Medicare, more than 1,400 providers are currently participating in bundles through the Bundled Payments for Care Improvement initiative. Early results are encouraging: orthopedic surgery bundles, in particular, have shown promising results on cost and quality in the first two years of the initiative.”

CMS’s second annual evaluation report covers both retrospective and prospective bundled payments, which may or may not include the acute inpatient hospital stay for a given episode of care. The report also describes the characteristics of the participants and includes quantitative results.

Future evaluation reports, CMS said, will exhibit a greater ability to detect changes in payment and quality due to larger sample sizes and the recent growth in participation of the initiative.

Key report highlights cited by CMS included:

  • Eleven out of the 15 clinical episode groups analyzed showed potential savings to Medicare. Future evaluation reports will have more data to analyze individual clinical episodes within these and additional groups.
  • Orthopedic surgery under Model 2 hospitals showed statistically significant savings of $864 per episode while showing improved quality as indicated by beneficiary surveys. Beneficiaries who received their care at participating hospitals indicated that they had greater improvement after 90 days post-discharge in two mobility measures than beneficiaries treated at comparison hospitals.
  • Cardiovascular surgery episodes under Model 2 hospitals did not show any savings yet, but quality of care was preserved. Over the next year, CMS noted that it “will have significantly more data available, enabling us to better estimate effects on costs and quality.”

“While there is more work to be done, CMS continues to move forward to achieving the Administration’s goal to have 50 percent of traditional Medicare payments tied to alternative payment models by 2018,” Conway added. “The 2016 goal of tying 30 percent of Medicare payments to alternative payment models was met 11 months ahead of schedule, and we are committed to keeping that momentum. Bundled payments – including the ongoing Comprehensive Care for Joint Replacement Model – continue to be an integral part of transforming our health care system by creating innovative care delivery models that support hospitals, doctors, and other providers in their efforts to deliver better care for patients while spending taxpayer dollars more wisely.”  

A Healthcare Dive report on the matter described CMS’s findings as “encouraging, yet inconclusive.”  

“On the flip side” of the good news, the report read, “(CMS) showed (that) average payments for spinal surgery episodes under BPCI participants increased $3,477, more relative to the increase among comparison providers, indicating mixed results and raising questions that ‘warrant further investigation.’”

“The agency has been aggressive in sallying forth and setting up mandatory bundled demonstration tests,” the report continued. “It is banking on a big bundled win to encourage better healthcare cost containment and quality. However, as Monday's report shows, more insights into bundled performance will be needed.”

As CMS did, Healthcare Dive also noted that as more data becomes available over the next year and beyond, upcoming reports will be able to better estimate the BPCI initiative's impacts on both costs and quality.

“This report, prepared by The Lewin Group, was the second of five planned annual reports,” the news website noted. “It looked at the experiences of Phase 2 participants in the first year of the initiative, in which episodes were initiated between October 2013 and September 2014. The report's qualitative results reflect participants’ experiences through June 2015, the researchers said, noting that participation has continued to grow since, with more providers entering Phase 2 in April and July 2015.”

To view the new bundled payment evaluation report in its entirety, go online to the CMS Innovation Center website.

About the Author

Mark Spivey is a national correspondent for VBPmonitor.com. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..  

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Last modified on Tuesday, 27 September 2016 17:07