CMS' new mandatory bundled payment models make it increasingly evident that the move away from fee-for-service reimbursement will not be gradual.
Leveraging experience gained through the Affordable Care Act, CMS is accelerating action to achieve the Department of Health and Human Services' goals of paying for value, specifically aiming to move 50 percent of payments into models by the end of 2018.
The latest step in this direction came on July 25 when CMS proposed payment bundles for cardiac care and cardiac rehab. The proposed rule indicates that CMS is attempting to test a broader application of bundled payment models, which look much like Comprehensive Care for Joint Replacement, with conditions that have a greater degree of medical complexity and variability.
If effective, the new models could generate significant savings for the Medicare program. Because these three conditions cost the system $11.1 billion annually, there is significant potential for dramatic savings if this initiative is scaled nationally.
What to expect next
CMS' actions could have far reaching impact as commercial payers often follow policies implemented by CMS. And the agency has not been quiet about its view of the most promising types of models, including bundled or episode payments, accountable care and advanced primary care.
Future models may focus on complex or chronic conditions. Medicare beneficiaries often have multiple health conditions or comorbidities, making it much more difficult to name the responsible provider. Over the next year, we may see more episodic models with add-on features to account for prevention, care management or high-risk patients.
CMS hasn't yet determined the most effective way to drive reform -- hence the many tests.
Mandatory models provide a means to test different designs. While voluntary models require the payer to provide significant financial incentives (or at least the potential for significant financial reward), mandatory models lock in providers, giving CMS a generally consistent intervention group and better assurances of sufficient volume. They also ensure the model can control for different biases that result from providers self-selecting into a test.
In addition, mandatory models allow CMS to utilize new price setting methods. CMS can set a single target price across many providers without concerns that "losing" providers (those with reduced payments) will just opt out.
That said, CMS has indicated that it will implement a new voluntary bundled payment model to follow the conclusion of the Bundled Payments for Care Improvement initiative beginning in calendar year 2018. naviHealth, and other early adopters, have worked closely with CMS to address the challenges presented by the BPCI model, which we expect to influence the new voluntary model.
Determining success of bundled payment programs
Bundled payment models encourage providers to take a longitudinal, quality-focused approach to patient care, as model participants have financial risk tied directly to the cost of services administered by other Medicare providers along the care continuum. Model participants are incentivized to collaborate with physicians and other health care providers to ensure that patients receive the highest quality care across the care continuum. Higher quality care translates to better outcomes, improved patient satisfaction and lower overall health care costs.
Alternative payment models like BPCI can't be categorized in a binary way. Some providers welcome these models as an opportunity for additional resources to fund changes or generate energy around new initiatives in care improvement. Alternatively, many fear potential reduced revenue, increased administrative burdens and limitations on care. Reality is somewhere between these two views; there are opportunities for significant care improvement, but they demand commitment and resources with a very limited time window.
Care redesign requires constant process improvement leveraging data and technology, identifying challenges in real time and utilizing feedback from patients and providers. There isn't a quick fix, but there is evidence that it is working. In our experience in bundled payment models, for example, we engage with patients and their caregivers to discuss their discharge options and care plans. Often, this helps patients return home sooner and avoid infections or complications that could lead to readmissions.
About the Author:
Clay Richards is the President and CEO of naviHealth (www.navihealth.us), a Cardinal Health Company, a post-acute care management company.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.