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Expert takes: Are bundled payments value-based care?

By Clare WirthJack Colleran

November 15, 2022

    It's easy to assume bundled payments are value-based care, many do. But in a recent conversation between Advisory Board experts, we found ourselves at odds. Our main takeaway? It's more nuanced than a simple yes or no.

    Below, we've laid out four experts' takes on whether bundled payments should be considered value-based care. Their answers may surprise you.

    Yes—They contribute to cost and quality improvements

    "I think bundled payments are a form of value-based payment in that providers are held accountable for cost and quality performance. The surgical bundles to date have mostly achieved savings from reductions in post-acute care spending. In the commercial space, bundled models can also be a mechanism to ensure price predictability over the length of a contract.

    One could argue the savings achieved from bundled models aren't enough to move the needle on health care affordability, but I don't realistically see global capitation being widely embraced by specialty practice except maybe for those that manage chronic conditions rather than acute episodes.

    You may see some innovative sub-capitation arrangements take form across the next few years, but these are more difficult to create compared to bundled payment contracts."

    – Colin Gelbaugh, Director of Health Systems Research

     

    "Yes. By capping the reimbursement providers can receive for an episode of care, bundled payment arrangements give providers the incentive to lower costs by supporting patients holistically and decreasing unnecessary expenditures, such as through reducing avoidable ED visits.

    We've seen this work in specialty care. For example, providers participating in UnitedHealthcare's Cancer Episode Program, who receive a prospective episode fee that bundles chemotherapy drug margins, lowered medical costs by 24% and improved quality by reducing ED visits by 25% and inpatient admissions by 43%.

    And in Southern California, bundled maternity payments were associated with a 20% drop in C-sections among first-time mothers with low-risk pregnancies. This is value-based care in action."

    – Lindsey Paul, Senior Analyst, Specialty Care and Consumerism Research

     

    No—They don't sufficiently address total cost of care

    "No, I don't believe that bundle payments are value-based care anymore. My position is based on the moment we're in. We know that value-based care varies in its definition. But I think it also varies in its ambition.

    At the early stages when we saw bundled payments as an 'appetizer' to socialize the idea with physicians I would have agreed. But now, we're onto the main course. When I think about value-based care, I think we're talking about total cost of care for lives and for years. Not about episodes or adjacent services."

    – Vidal Seegobin, Managing Director of International Research

     

    "Can bundled payments encourage the delivery of higher-quality, lower-cost care? Absolutely. Early pilots by employers such as Walmart and providers like the Cleveland Clinic have provided a clear proof of concept. Would bundled payments be a necessary—or even realistic—component of a nationwide embrace of value-based care? That is a much harder question to answer.

    Organizations who have dually participated in both total cost of care and episodic models have found that it is operationally difficult (and at times even financially detrimental) to juggle them simultaneously, especially when models overlap for the same patient population.

    A more realistic path forward may to be embrace bundles within the commercial population, while keeping Medicare focused on total cost of care models like capitation."

    – Yulan Egan, Managing Director of Value-Based Care Research

     

    Bundled payments play a role in the VBC journey but how much they'll influence the future depends on how leaders define their ambition.

    Do you think bundles are VBC? Email me your take at colleranj@advisory.com.

    Value-based care should be more than a buzzword

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    Commercial risk will either tip the industry towards value-based care or keep us in a world of hybrid incentives. It's complicated, but is it possible? We think so.

    Learn how you can help push us towards a new cost and quality standard by visiting advisory.com/VBC.

    Read more

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