If You Bundle… They Will Save

Bundled payments aren’t just a way to save on auto and home insurance but are potentially an effective method to save on healthcare costs… unless they aren’t.

Under the MACRA legislation, CMS’s Center for Medicare and Medicaid Innovation (CMMI) created a number of rules in an effort to move Medicare providers into a more quality-centered payment model. One part of this endeavor was the creation of Episode Payment Models (EPM) and the Cardiac Rehabilitation (CR) Incentive Payment Model. These episodic models were intended to reduce the overall cost of some procedures that required significant time in a hospital to complete treatment. For example, surgery to treat a hip fracture and all of the care following that surgery would be paid by Medicare at the same rate regardless of the volume or types of procedures necessary to complete treatment. The CR incentive program was designed to provide incentive payments based on the Medicare beneficiary use of cardiac services in the first few months following a heart attack or coronary bypass surgery.

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Photo credit: imperix.ch

The idea is to fix the cost of all procedures and tests together in one convenient bundle in order standardize the cost and encourage hospitals to increase coordination of care. The result would be an increase in quality of care and a reduction in overall cost.

The final rules for Medicare bundled payment programs were published in the Federal Register on December 20, 2016 and mandatory participation in the programs was slated to begin on July 1, 2017.  The models were held from starting on July 1st and placed on hold while the Department of Health and Human Services could reevaluate the program. Fast forward to 3 weeks ago on August 15, 2017 and CMS published a proposed rule that cancels the EPM and CR programs completely. Citing a hope to increase future voluntary participation, CMS was stopping the bundled payment programs as they were required to be mandatory.

I wanted to bring this up not only because it is relevant to VBH but more so because this is a change occurring right now. The world surrounding VBH is fluid and dynamic. There are ebbs and flows in policy however, VBH has made steady progress toward full realization over the past couple decades. While it doesn’t matter what stance you take with regard to policy changes of this kind it is important to remember that it will take significant investment from providers, hospitals and payers for VBH to take hold as the predominant model for healthcare payment. Resistance to change is usually a given and the more stakeholders that are satisfied and open to a change now, the less likely there will be resistance in the future.

This turn of events might be considered a step backward but, bundled payments are only a small part of the larger whole. In fact not all of CMS’s bundled models were cancelled. The Comprehensive Care for Joint Replacement (CCJR) model was left mostly intact. The geographic regions required to participate in the program were decreased and only about half of the total overall hospitals intended to participate remain in the program.  I also don’t believe that bundled payments will go away anytime soon. They are a relatively straightforward way to drive change when it comes to major hospital-centric procedures

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