Bundled payment programs have gotten much less attention than Medicare ACOs and commercial global capitation programs, but they offer an attractive risk and care management option that is designed more for specialists than for PCPs. Typically bundled payment programs are initiated by a discrete clinical diagnosis or event, and cover all necessary care for a pre-determined period of time. For example, the Medicare BPCI demonstration is initiated by a hospital admission and includes all medical services required for 30, 60, or 90 days post discharge, depending on the preference of the participating provider. In this construct the specialist is the “point person” for managing all of the care and costs for the patient within the bundled period, and is in position to earn any savings (and cover any losses) that are realized through better care coordination, lower complication rates, and lower readmissions. The basic theory behind bundled payment programs is that they focus care and risk management responsibilities and opportunities on the best provider to treat targeted patient populations at the period in time when those patients most need their expertise. Below is an illustration of a 90 day bundle as defined by Model 2 of the CMS bundled payment initiative.
90 Day BPCI Bundle Construct
There are a number of opportunities and advantages for specialists who position themselves as the owner of bundles within their clinical specialty. The first is a clear financial rationale for improving patient care through better coordination and communication during a clinical episode. The second is access to new revenue sources from other providers along the continuum, particularly for conditions with high historical SNF and re-hospitalization costs, or with opportunities to deliver care in lower cost settings. According to a recent Med-Pac study, average post-acute costs for Medicare patients can exceed $25,000 for some conditions, with broad variability of spending within conditions. The chart below illustrates post-acute spending and variability in spending for 10 conditions studied by Med-Pac.
As the owner of a bundle, all revenue earned by other providers along the continuum becomes opportunity cost to the specialist, which means that every dollar saved through better care coordination, reduced utilization, and value based site of service choices, is a dollar earned by the owner of the bundle A third advantage of the bundled payment structure is that it creates a platform for specialists to drive and earn value in the payment reform movement. As “accountability” and value based reimbursement become more prevalent, excess costs and utilization are likely to come down. In a Fee-for-Service environment the health plan benefits financially as costs come out of the system; in an ACO primary care physicians are poised to benefit the most; the bundled payment structure allows the specialist to own their discrete portion of the population’s health care needs, creates new opportunities to fund improvements in patient care, and positions the specialist to earn savings dollars as costs come out of the system. This structure also works well within an ACO or global cap arrangement as it creates a mechanism to actively engage and incentivize key specialists to manage care and costs more closely. The grid below outlines key aspects of the predominant healthcare reimbursement methods and how bundled payment fits in.
Overview of Healthcare Reimbursement Structures