CMS is Leading the Way Toward Bundled Payments. Should It Be?

Ryan Black
MARCH 02, 2018

Before he became head of the Department of Health & Human Services (HHS), Tom Price, MD, said the architects of a planned mandatory bundled payments program were “experimenting with Americans’ health.” In 2016, CMS, the most robust arm of the department, had issued such a plan, which required certain cardiac and orthopedic interventions to be performed within parameters designed to level outcomes and mitigate costs. It was exactly what Price did not want to see. He resigned before he could undo the program but delayed its implementation before it was canceled last December. In its place rose a similar initiative, comparable with the first in almost every way save for the inclusion of a few outpatient procedures and the nature of participation: The new Bundled Payments for Care Improvement Advanced (BPCI Advanced) plan, unveiled in January 2018, is entirely voluntary.

A day before, JAMA published a study examining voluntary bundled payment pilot programs. Although some produced stellar results—previous work showed an average savings that exceeded $1000 per joint replacement with outcomes unchanged—they also struggle to get off the ground. Only 12% of eligible hospitals joined, almost all of which were in cities. The programs also suffered attrition: More than half of hospitals had abandoned the program in some way, and a fifth stopped participating altogether.

CMS has not given up on bundled payments. They are a key element in the value-based care movement: pay for a total episode of care as a single unit (instead of a series of procedures and visits) while maintaining positive outcomes. The federal government has been the key driver.

The Oncology Care Model (OCM) is another example of CMS’ commitment to bundles. It was born as a vital element of the Center for Medicare and Medicaid Innovation, itself a product of the Affordable Care Act (ACA). Bundled payments are less discussed parts of the ACA, but they are designed to make the law work. The bill expanded Medicare expenditures, and it included provisions to try to get more from that money.

The OCM is also voluntary and, according to experts who spoke to Healthcare Analytics News(HCA), is respected enough to be safe from administrative changes at HHS and CMS. The same experts also said, however, that cancer is far more complex and expensive to treat through bundled care than open-and-shut procedures like knee replacements. Some top cancer centers have paired with analytics firms to explore their own bundled payment programs as a way of remaining on the cutting edge while competing for patients, but those programs are sparse and young.

All things considered, CMS has emerged as the primary driver of bundled payments. The questions, then, are how it can best proceed and whether it should be the key force behind this aspect of the value-based care movement.

Is There Value in Voluntary?

The irony of Price’s objection to mandatory payment bundles—that they are “experiments”—is the reason why many in healthcare like them. Doctors are scientists, and scientists experiment. “The beauty of the mandatory bundle for joint and cardiac procedures is that you basically have a randomized trial where you can see [whether] bundles increase the volume of procedures, [whether] hospitals are able to save money, and [whether] quality is maintained,” Ezekiel Emanuel, MD, told HCA in an interview. “You get real data.”

Emanuel, the founding chair of the Department of Bioethics at the National Institutes of Health and vice provost for global initiatives at the University of Pennsylvania, takes credit for working behind the scenes to launch the OCM, and he has also published studies and opinion letters regarding the efficacy of the joint replacement bundles.

“What happens with voluntary?” he asked. “Who is going to participate? Someone who thinks they’re going to succeed. It’s not a random sample, and it doesn’t get those people who are sitting on the sidelines waiting, the [major for-profit health systems]. You’ve got to get those people to play the game.”

To Amol Navathe, MD, PhD, that self-selection problem is troubling. A colleague of Emanuel’s at the University of Pennsylvania, the healthcare economist has studied bundled payments for years. Hospitals that choose to participate in bundled payment programs are most often high-volume, nonprofit, and urban. Few safety-net or for-profit hospitals have done the same. 

What he finds interesting about that breakdown is that in earlier mandatory pilot programs like the Comprehensive Joint Replacement program that preceded CMS’ voluntary bundles, some reluctant hospitals likely benefited. Nearly half of the hospitals that his group studied in that program earned savings.

“There [must] be participant hospitals in there that wouldn’t have volunteered and yet achieved savings while hitting quality targets,” he said. “Mandatory programs are much better for getting broad participation that impacts more beneficiaries and are better at producing robust evidence.” On the other hand, some hospitals cannot make the programs work, he said.

Darcie Hurteau, MBA, is more lenient with BPCI Advanced. She’s the senior director of informatics for DataGen, a healthcare analytics and policy firm helping health systems with new payment models. She thinks providers who participated in the first BPCI would have pursued many of the practices within the program on their own and that the new form will allow them to join a proven system. Over time, more may gravitate toward the models, which could undo some of the skew toward urban and nonprofit centers.

“You’re not going to shift this paradigm overnight. It’s going to take a while. You need to get all players involved at the point that makes sense for them,” she said.

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