What are Bundled Payments Really About?

Post by Neal Singh

Chief Executive Officer, Caradigm

It wasn’t that long ago that the healthcare industry was trying to agree upon a definition of population health and you’d see articles like this one that tried to explain it. It’s actually pretty remarkable how in a short period of time, provider organizations have made great strides in adopting strategies and building technology infrastructure to adapt to value-based reimbursement models. We’re now entering the next phase of population health where the industry can apply learnings and iterate to hone in on the strategies that will actually yield better value for patients – improved outcomes at a lower cost. One of the most important programs that many providers are adopting is the Bundled Payment for Care Improvement (BPCI) program. Let’s explore the topic further.

Why do we fundamentally need bundled payments? Patient outcomes and costs have to be viewed holistically. The care of patients and payment of services for a single course of treatment often requires multiple providers in multiple care settings, but has historically been siloed. For example, a patient needing a hip replacement requires care from a host of clinicians including a surgeon, anesthesiologist, radiologist, care manager, physical therapist, home health aide, pharmacist, etc. In a fragmented health system, care is not coordinated between providers, which leads to inefficiencies and variability. In order to incentivize coordinated and standardized care, The Centers for Medicare and Medicaid Services (CMS) will now pay a single payment for all of the services performed to treat a specific episode of care in the BPCI program in four models, as well as will hold providers more accountable for patient outcomes such as readmissions. Bundled healthcare services are also making waves globally as they are being applied successfully in multiple countries including Germany and the Netherlands.[1]

I believe this is a significant step towards delivering better value to patients. Approaching the delivery of healthcare as an episode that takes place across the continuum increases visibility and accountability for both outcomes and costs. When measuring outcomes, if providers look beyond what they directly control to the full cycle of care, they will be able to identify new areas of improvement. The beauty of BPCI is that improving outcomes (e.g. speeding up time to begin treatment, reducing complications such as infections that lead to readmissions), often leads to lower costs. Likewise, by looking holistically at costs, providers will be able to determine new areas of improvement such as how quality care can be delivered by the appropriate and most cost-efficient clinician in the appropriate and most cost-efficient facility.

In the short-term, there could be shared savings opportunities as waste and inefficiency are removed. In the long term, repeatability and continuous refinement will lead to excellence in specific episodes of care that can help secure additional contracts. Providers will also be able to apply the improvements in care outside of the Medicare population so that other populations can benefit. As providers become domain experts in their areas of strength, they will set the benchmark for clinical outcomes and cost reduction for the rest of the industry. That’s healthcare transformation.

BPCI does however create some new challenges for healthcare providers. It links specialists, primary care and post-acute care services in a way that will force providers across the continuum to collaborate and change existing practices and workflows. Providers will need to integrate care and thus share data from health IT systems across sites within their health system and with external providers to improve the coordination of patients moving between different settings. These are significant barriers given that legacy health IT systems were not designed to support these types of integrated workflows. Innovation in health IT is required such as the sharing of patient data (e.g. lab results, care plans) in real-time across multi-EMR environments and streamlined workflows (e.g. automated role-based tasking, tracking of patients across the continuum, secure messaging).

I firmly believe that BPCI will expand rapidly and that it will become one of the key levers helping providers effectively transform healthcare delivery and drive better outcomes for patients. It’s a provider and patient friendly program because it is not focused on reducing utilization, but focused on improving efficiency and accountability for quality and costs. It also supports the CMS goal of interoperability and the broader direction of accountable care organizations and clinically integrated networks. Stay tuned for future blog posts where other members of the Caradigm team will explore bundled payments in more detail including how Caradigm’s award-winning care coordination solution supports BPCI workflows.

[1] Bundling Payments to Promote Integration and Efficiency. The Commonwealth Fund. Originally published: http://www.commonwealthfund.org/publications/international-innovation/apr/bundled-payments-to-promote-integration-and-efficiency