Bundled Payment Is All the Rage—but Is It Right for Your Health Care Organization?

Blog posted by Nicole Fallon

ACOs are so six months ago. The hot topic du jour among health care providers is bundled payments.

In my last post, I shared an overview of the new Bundled Payment for Care Improvement Initiative, rolled out by the Center for Medicare and Medicaid Innovation (CMMI). Since its debut, the issue of bundled payments has piqued the interest of many health care providers, and a good number of our clients have begun asking about it. Just like any bandwagon, everyone seems to want to jump on, but many haven’t necessarily considered where it will take them or if they really ought to go there.

So, before your organization hops aboard, allow us to give you a few pointers. Several of us who serve health care clients at LarsonAllen paused to consider some of the reasons a provider would want to participate in a bundled payment arrangement.

Reasons to participate in CMMI’s bundled payment initiative:

• Given that reimbursement through public and private payers is moving toward a more global payment model, applying for this initiative could serve as a discovery exercise, helping organizations and providers understand their costs and care delivery in a new way. The results could yield information that better positions them for future success.
• The initiative presents an opportunity to test new payment models in a more limited way than participation in an accountable care organization (ACO), which in turn limits the organization’s risk while positioning it to be a desired partner in the future.
• A group of providers or an organization that has already been testing these models and is ready to undertake this payment methodology with all of its payers would be a good candidate for this initiative.

This list isn’t comprehensive, but it outlines the primary motives for pursuing this latest testing of new payment models. If they sound relevant to your organization, you might want to apply.

And it’s important to note that you might pursue this opportunity for the above reasons, knowing that your application won’t be accepted but still deriving value out of the application process itself. That exploration could generate some highly useful insight and information, so even if you’re on the fence about it, consider giving it a go.

Desirable characteristics of providers or organizations considering bundled payment

Another thing we’ve given some thought to is what provider or organizational attributes would make one more prepared and successful at a bundled payment arrangement. You can use the list below to decide if your organization is in a good position to apply for CMMI’s initiative or use it to identify which areas your organization needs to develop in order to be successful under future payment models.

Acute Care Hospital	Physician	Post-Acute Care
Patient Volume Current outcome measure system Operating EHR platform Evidence-based practices Established or evolving clinical pathways Strong physician affiliation (either employed or partnered) Staff resources to devote to bundled payment project Sufficient reserves to embrace risk Willingness to embrace care redesign	Patient Volume Current outcome measure system Operating EHR platform Evidence-based practices Established or evolving clinical pathways Staff resources to devote to bundled payment project Disease registry participation Acute hospital or post-acute affiliation or collaboration Sufficient reserves to embrace risk Willingness to embrace care redesign	Patient Volume Multi-site presence (unless already part of acute hospital/physician system) Current outcome measure system Operating EHR platform Evidence-based practices Established or evolving clinical pathways Staff resources to devote to bundled payment project Sufficiency of experience with distinct patient types (i.e., TJR, CHF, COPD, CVA, etc.) Strong physician affiliation or collaboration Sufficient reserves to embrace risk Willingness to embrace care redesign

Managing the application process

If bundled payment is truly about coordination, integration, care redesign, and lower costs (just to name a few of its goals), then actually applying to participate in a bundled payment arrangement will require a lot of work between now and the time the application is due to CMMI.

Your organization will need to coordinate the following services, among others, to complete your application:

• Data analysis and assistance with bundled payment target price-setting
• Technical writing for the application responses and summaries
• Project management to facilitate the application process (e.g., identify steps, tasks, and timelines), including guidance to partnering providers/organizations on issues such as:
  • Roles and responsibilities of the partnering organizations
  • Legal and financial implementation issues (e.g., gain- and risk-sharing arrangements)
  • Development of clinical care redesign for the proposed episodes
  • Tracking and reporting of quality metrics

Extended deadlines for hospitals pursuing Model 1

Both the letter of intent and the application itself have revised deadlines for hospitals interested in Model 1 participation.

	Model 1	Model 2	Model 3	Model 4
Non-binding Letter of Intent	October 6, 2011	November 4, 2011	November 4, 2011	November 4, 2011
Application	November 18, 2011	March 15, 2012	March 15, 2012	March 15, 2012

As an organization considering applying for the bundled payment initiative, is this information helpful in making in your decision? Do you have any other thoughts on this issue? Feel free to share your ideas with us and post your comments below.