Get Ready for Bundled Payments: They’re Coming Your Way

EXECUTIVE SUMMARY

The fact that the CMS is extending its three-year voluntary Bundled Payments for Care Improving pilot and has launched the mandatory bundled payment project, Comprehensive Care for Joint Replacement, in 67 markets leads experts to conclude that bundled payments are here to stay and will be expanded.

• Bundled payments mean case managers need to manage the length of stay and choice of post-acute options more closely than ever before and make sure that patients receive the most cost-effective and efficient care to meet their individual needs.
• Even if their hospital isn’t part of a bundled payment program, case managers should prepare for the future by cementing relationships with post-acute providers and analyzing the variability in cost of care and patient outcomes and identifying opportunities for improvement.
• Relationships with post-acute providers are critical and should go beyond just getting to know the staff, and include sharing patient data.

If your hospital is not in one of the geographic areas where the CMS mandated that hospitals participate in the Comprehensive Care for Joint Replacement program, don’t think you’ve dodged the bundled payment bullet.

Bundled payments are not only here to stay, but hospitals can expect CMS to expand them to other markets and other DRGs, says John W. Malone, MOD, vice president at Novia Strategies, a national healthcare consulting firm.

Hospitals that are not participating in a bundled payment program, either voluntary or mandatory, still need to start making changes to adapt to the new systems of reimbursement, adds Donna Hopkins, MS, RN, CMAC, vice president at Novia Strategies.

“We know that the bundled payment train is out of the station and it’s not going back. Hospitals not in any bundled payment program may end up being late participants and they need to prepare now,” Hopkins says. In addition to the CMS programs, commercial managed care payers are launching their own bundled payments arrangements, she adds.

CMS’ latest initiative, Comprehensive Care for Joint Replacement, which went live April 1, is mandatory in 67 markets and covers DRG 469 (major joint replacement of lower extremity with major complications or comorbidities) and DRG 470 (major joint replacement of lower extremity without major complications or comorbidities) from admission to 90 days post-acute.

The first CMS initiative, Bundled Payments for Care Improvement (BPCI), was originally scheduled to be a three-year pilot ending this fall. Current participants have the option of extending their participation for an additional two years, through September 30, 2018. The Bundled Payments for Care Improvement program attracted more than 1,500 participants.

“The extension of the BPCI program for two additional years is a win for both patients and providers as the program has resulted in better coordinated care for the patient, reduced readmission rates, and reduced utilization of skilled nursing, which has enabled more patients to recover in their home environment,” says Deirdre Baggot, PhD, MBA, RN, principal at ECG Management Consultants and former expert panel reviewer for the Bundled Payment for Care Improvement Initiative. The Congressional Budget Office estimates that bundled payments could save CMS approximately $19 billion between 2010 and 2019, she says.

Bundled payments are popular with providers as well, Baggot says. “Doctors and hospitals are winning with BPCI for the most part, so yes, I fully expect participants to take CMS up on their offer to extend the program through the fall of 2018,” she says.

In a survey conducted by ECG Management Consultants, 70% of respondents reported that their healthcare organizations are engaged in some sort of bundled payments reimbursement, she adds. “For hospitals and health systems, bundled payment has a relatively low entry point. It’s doable,” Baggot says. “And with the Comprehensive Care for Joint Replacement program mandate, most hospital CEOs are coming to the conclusion that it’s just good business to be able to effectively compete on both quality and cost. Thus, they have embarked upon readying their organizations for bundled payments and other value-based payment models,” Baggot says.

Baggot points out that the cost of healthcare in the United States is double that of comparable nations, despite the fact that the U.S. has the lowest life expectancy and highest infant mortality rate among the wealthiest nations in the world and that the healthcare system is going to have to change in order to survive.

“If we want to revolutionize healthcare, hospitals, physicians, policymakers, and innovators must continue the work that is underway all over this country. With the health of our people and the well-being of our economy hanging in the balance, this is no time to delay,” she says.

The announcement this summer that the Medicare Trust Fund is expected to run out in 2028 means CMS is going to be looking at even more ways to cut costs and improve care, Malone adds.

Bundled payments are just one component of the healthcare market’s overall shift to reimbursement based on value, Malone states. In addition to bundled payments, CMS and other payers have rolled out shared savings programs, such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Quality Payment program as well as the Improving Medicare Post-Acute Care Transformation Act (IMPACT).“They all take a slightly different approach, but their goals are to achieve the same results: higher quality at lower costs,” Malone says.

And all of them mean that hospitals have to change the way they do things to succeed in the future, he adds. “Case managers should be looking at the broader context of reimbursement changes across all payers and how it will affect their work,” he says.

Bundled payments arrangements are very good in increasing quality and decreasing the costs, says Brittany Cunningham, MSN, RN, CSSBB, director of episodes of care for the 1,000-bed Vanderbilt Medical Center located in Nashville, TN, who has spearheaded the medical center’s bundled payments initiatives. “They are good for the patient and good for the provider,” she adds. (For details on Vanderbilt Medical Center’s bundled payments initiatives, see related article in this issue.)

Cunningham predicts that in the future, healthcare reimbursement will be a blend of the accountable care organization (ACO) model and bundled payments, with the ACO concentrating on primary care patients, chronic diseases, and bundled payment arrangements for specialty care.

“Bundled payments are not going away. They may blend into other payment arrangements that are based on quality,” she says.

CMS is highly likely to expand the mandatory bundled payment program in the future, adds Graham A. Brown, MPH, CRC, vice president and practice lead for population health and bundled payments for GE Healthcare Camden Group.

The markets CMS chose for the mandatory joint replacement bundled payments program have a large population covered by Medicare fee-for-service with great variability in acute care and post-acute care lengths of stay, along with variability in costs, disparate outcomes, a high level of complications and readmissions, and poor patient satisfaction scores, Brown says.

One option is for CMS to expand the total joint replacement program to additional markets, particularly those where there has not been significant participation in the voluntary bundled payment program and where there is a high volume of cases and a high level of variability among providers, he adds.

Another possibility is that CMS will add the DRGs that have been most successful in the voluntary Bundled Payments for Care Improvement program, such as cardiac care and bypass surgery, or choose clinical episodes that have been successful in other demonstration projects, he says.

When CMS announced the mandatory bundled payment program, it built in a grace period until January 2017 to give providers an opportunity to develop their program without bearing risk. CMS created the grace period to address concern from people who commented on the proposal that organizations needed time to develop a way to effectively coordinate care for joint patients, Baggot says.

Now, Georgia Congressmen Rep. Tom Price and Rep. David Scott have introduced a bill that would delay the Comprehensive Care for Joint Replacement program implementation until Jan. 1, 2018, to give providers more time to prepare. The bill, HR 4848, has been referred to both the House Ways and Means and House Energy and Commerce committees.

“The fact that we, as an industry, do not already have in place some level of rudimentary care coordination is a disgrace,” Baggot says.

The Comprehensive Care for Joint Replacement program is similar to Model 2 in the Bundled Payments for Care Improvement, but is completely separate. The program is in effect in for every hospital that performs hip and knee replacement in 67 specific markets and places all of the risk on the hospitals. Hospitals’ reimbursement will be based on the hospital’s historical averages and regional benchmarks.

The program requires hospitals to manage the patients from admission through the end of the care continuum, Malone points out. “Hospitals are taking the biggest risk and they have to take some responsibility in overseeing the plan of care throughout the episode of care,” he adds.

Bundled payments require case managers to shift to a totally different way of thinking, Hopkins says. “The program mandates that case managers look at the most cost-effective plan for each patient. They have to manage the length of stay in the acute care hospital more closely and ensure that the patient stays at the lowest level of care possible at the least cost throughout the episode of care,” she says.

Case managers are critical to the success of bundled payments, Malone adds.

“Case managers are at the heart of making sure that bundled payments programs are effective from an outcomes, an operational, and a cost perspective. If hospital leadership hasn’t come to case management yet, the department leadership needs to learn what is happening in their hospital and become a part of it,” Malone says. At the end of the day, case management is going to be responsible for the entire care continuum and how that is orchestrated without additional silos and fragmentation will be key, Hopkins says. “Case managers’ responsibilities are going to extend outside the walls of the hospital,” she adds.

Editor’s note: As this issue went to press, CMS proposed beginning a mandatory bundled payments pilot program for cardiac patients in 98 metropolitan areas beginning July 1, 2017. CMS also proposed adding hip and femur fractures to the Comprehensive Care for Joint Replacement program.