on November 21, 2012 |
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Topics: Bundled Payments, Market Trends, Strategy, Around the Nation, Finance
David Clain
Many health system leaders have been keenly watching developments in Bundled Payments for Care Improvement (BPCI), an initiative from the Center for Medicare and Medicaid Innovation that will reimburse whole episodes of care at a single price.
BPCI initially invited applicants to propose their own bundles, including which clinical conditions, post-acute services, and post-discharge periods would be covered. But in September, CMMI changed course and instead provided a limited set of standardized bundles that providers can choose to pursue.
Reactions across the industry
We have heard mixed reactions from applicants about these changes. One hospital executive we spoke with recently felt that Medicare had “pulled the rug out” from under them: his institution had gone to significant effort and expense to design bundles, only to have CMMI ultimately mandate its own set of bundles available to providers.
Many other health system leaders we have spoken with have been more reserved, having expected that CMMI would standardize bundles in the interest of operational feasibility. Our anecdotal sense is that most candidate awardees will proceed with BPCI as long as the price targets that CMMI proposes are close to what they expect.
CMMI rolling out details
Over the past few months, CMMI has been announcing new details about the rules for BPCI through a series of webconferences. Yesterday’s call brought some new and, in our view, significant updates to the program—many of which will likely please participating providers.
Much to its credit, CMMI seems to be responding to concerns from providers that the new direction of the BPCI initiative exposes them to greater risk and does not allow sufficient time to analyze data before determining whether to proceed. CMMI continues to seek provider input on pricing and operational mechanics, which have not yet been finalized.
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CMMI announces trial period, limited-risk option for bundled payments
on November 7, 2012 |
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Topics: Finance, Bundled Payments, Market Trends, Strategy
David Clain and Josh Gray
Over the last few weeks, the Center for Medicare and Medicaid Innovation (CMMI) has shaken up its approach to the Bundled Payments for Care Improvement (BPCI) initiative. The initiative will significantly expand the number of health systems around the country that are reimbursed through bundled payments, which combine various hospital and physician services at a single price.
Initially, CMMI invited BPCI applicants to propose clinical conditions for bundling, with significant latitude to define the length of a bundle episode and the post-acute services included. But more recently, CMMI has announced that it will limit provider flexibility in order to reduce the administrative complexity. Rather than pursue the bundles they had proposed, participants in the BPCI initiative must now choose from CMMI’s limited set of bundles.
The 48 bundles CMMI has defined include a total of 180 DRGs, which account for about 70% of annual Medicare spending. Many of the bundles cover cardiac, orthopedic, and spinal procedures, which in our experience were frequently proposed by applicants. Fully half of the bundles cover medical conditions, which were not included in Medicare’s earlier Acute Care Episode (ACE) Demonstration or in most of the commercial initiatives we are familiar with.
During a Financial Leadership Council webconference last week—which included executives from health systems participating in BPCI or pursuing commercial bundled payment arrangements—we asked a series of survey questions about which conditions these health system leaders expect to bundle.
Most providers anticipate offering cardiac and orthopedic surgical bundles, which were included (with positive results for cost and quality) in the ACE Demonstration. Many providers anticipate offering bundles for spinal procedures, which they believe offer opportunities for reduced clinical and cost variation. A majority of providers in our survey plan to offer medical bundles as well, typically for cardiology and pulmonology.
We believe this interest in testing bundled payment more broadly is an encouraging sign. Medicare has made clear that bundled payment is a central part of its strategy to improve patient outcomes while reducing cost growth, and a large-scale rollout of bundled payment across many service lines is essential to determining how effectively it can serve those goals.
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Charting a new course for bundled payment? More medicine, new service lines on the horizon
on October 25, 2012 |
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Topics: Finance, Bundled Payments, Market Trends, Strategy
Josh Gray, Managing Director, Financial Leadership Council
Brett Erhardt, Dedicated Advisor, Performance Technologies
Over the last two weeks, the Center for Medicare and Medicaid Innovation (CMMI) has notified select applicants for the Bundled Payment for Care Improvement (BPCI) initiative that they passed the Center's technical review process. However, for some applicants, this good news has been tempered by an unanticipated curveball.
Here's the catch
BPCI applicants had previously been invited to essentially design their own proposed bundles, selecting the DRGs to be covered, the relevant time period (hospitalization only or hospitalization plus 30+ days of post-acute care), and related ICD-9 codes to be included in the bundles for post-discharge care.
In preparing their applications, many providers invested considerable time—like the several we spoke with who incurred six-figure consulting expenses to help them conduct rigorous financial modeling in what is essentially uncharted territory.
For other providers, the standardization of bundles will be welcome. Some applicants we have heard from feared that they did not have adequate resources to design their own bundles, and so the standardization from CMMI—along with the additional pricing guidance the Center will provide—will be helpful.
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Reactions to a curveball on bundled payment
