Toward Accountable Payment

Update from the Symposium: Inside Medicare's Bundled Payment Initiative

The National Population Health Symposium’s second panel explored lessons from Medicare’s other big payment experiment, bundled payments.

Rob Lazerow, practice manager with the Health Care Advisory Board, overviewed Medicare’s bundled payment initiative and offered three rationales for why bundled payments play such an important role in changing how health care is delivered:

1. Bundling restores rationality to health care spending, driving providers to consider costs more carefully and eliminate costly waste from health care.

2. Bundled payments encourage providers across the continuum to align. The model presents a viable option for organizations looking to facilitate more collaborative care delivery.

3. Bundled payments provide a method to package disparate care actions into the products payers want to buy. By tying payments for episodes together, they force providers to abandon a siloed, a-la-carte approach to health care delivery and offer a more integrated, coordinated product.


Our first panelist was Michael Zucker, the chief development officer from Baptist Health System. Mike noted that four years ago, “it would have been hard to imagine gathering 300 people in a room to talk about bundled payments.” The model has really taken off, though, and Baptist was one of bundling’s first movers. For Baptist, bundling offered a platform for aligning with physicians, as well as an opportunity to create a catalyst for shifting to evidence-based medicine.

Baptist started bundling through Medicare’s Acute Care Episode (ACE) demonstration back in 2009. Focusing primarily on instilling consistency in order to set utilization, Baptist saw huge improvements in the first few months of the program, achieving 87% compliance just three months in. By mid-2010, Baptist had achieved 97% compliance and nearly $1,000 savings in average cost per case. Baptist was able to gainshare over $1 million in savings with its participating physicians.

Tennessee Orthopedics

Earl Anderson, representing Tennessee Orthopedic Clinics, spoke candidly about the challenges engaging physicians in the kinds of efforts that they, Baptist, and others have made through the bundled payment initiative. From his perspective, the biggest question was “how to structure incentives that reward the right behavior” without alienating physicians.

Tennessee Orthopedics created a withhold fund from a defined pool of money. They then built an internal report card, containing both volume- and value-based metrics, and used physicians’ scores to determine how to distribute the withheld funds. According to Anderson, bundled payment pilots mean “there will be winners and losers.” This reality makes selecting performance metrics and soliciting physician buy-in that much more important.

Brooks Rehab

With so much cost variability tracing back to post-acute care providers, we were thrilled to have Michael Spigel, EVP and COO of Brooks Rehab, speak about his experiences with bundled payments. Spigel revisited a topic that Dr. Lisa Bielamowicz raised at the beginning of the day: many patients are visiting multiple post-acute care facilities, and participating providers report as many as hundreds of post-acute care partners. The sheer volume of traffic makes patient patterns impossible to track; perhaps more importantly, it prevents hospital clinicians from creating strong, productive relationships with PAC clinicians and likely drives overall spending.

Brooks is participating in two different bundling models with a total of five hospital partners. Brooks has focused on identifying the unique patient characteristics that drive likely episodic spending, and on redesigning its care pathways to address these risk factors.


Tricia Nguyen, former CMO of Banner Health, closed our panel by sharing Banner’s takeaways from participating in both Medicare’s Shared Savings Program and its bundled payment initiative. Banner found that “if we were successful at keeping patients healthy, we prevented a certain number of episodic costs along the way.” Banner focused its efforts on three main areas with overlapping benefits for both the ACO program and the bundled payment initiative: care transitions, care management, and social health.

Stay Tuned

Only two panels in, we’re already seeing a theme emerge: success under risk-based contracts requires smoothing care transitions for at-risk patients and addressing not only their health care needs, but their socioeconomic stability, a key underlying driver of health care costs.

We’ll be posting dispatches from the National Population Health Symposium on this blog across the day, so stay tuned. For shorter, real-time insights from the Symposium, follow the hashtag #NPHS2013 on Twitter.

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A quick refresher on bundled payment

Anytime you read about hospital finance or changing reimbursement models, the term "bundled payment" will come up without fail. We break down what it really means—and why it matters. Watch the video.


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