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Bundled Payment Strategies that Pay Off Big


There is no perfect formula to finding success in bundled payment programs, and certainly not all bundled payment participants are created equal. In fact, it has been said that no two bundled payment programs are alike. While the Centers for Medicare & Medicaid Services (CMS) continues to test the concept, each program has different approaches, underlying factors and differing opinions on achieving success in a bundled payment program.

One thing most experts do align on, though, is bundled payments’ effectiveness in reducing cost and utilization. A recent study published in the Commonwealth Fund showed evidence of bundled payment models’ potential to reduce medical spending growth, while a prior review by the Agency for Healthcare Quality and Research found bundled payments to be associated with decreased spending and utilization of services in the bundles.

Recent actions from CMS indicate that the agency is doubling down on a future that includes episode payment models. Providers that transition to bundled payment models now will learn to operate in them successfully – gaining time to practice before these models become mandatory.

In Premier’s experience, there are a few tried and true bundled payment strategies that pay off – and often, pay off big.

One key strategy is the “bundle of bundles” approach, also known as a portfolio model, which allows providers to:

  • Create economies of scale.
  • Increase episode volume to better cushion unavoidable outlier cases.
  • Develop a service line approach that improves patient care even beyond the targeted bundle population.

The portfolio model leverages the selection of complementary episodes of care, which have been organized into service line groups to collectively form the portfolio. With this approach, the success or failure of the entire portfolio’s performance is calculated versus the individual performance of any specific episode of care.

Premier members that participate in this portfolio model with five or more clinical episodes simultaneously earn 69 percent more savings per episode than clients participating in fewer than five bundles, according to recent reconciliations for members in Premier’s Bundled Payment Collaborative participating in Bundled Payment for Care Improvement (BPCI) Advanced Performance Period 3.

Now, CMS and the Center for Medicare and Medicaid Innovation (Innovation Center) are aligning around the approach Premier has been preaching for years.

The agencies’ mid-program change for BPCI Advanced, which went into effect Jan. 1, 2021, echoes the “bundle of bundles” approach. Specifically, one of the program changes introduced eight Clinical Episode Service Line Groups (CESLGs) that are grouped together by similar condition and disease states. For example, a provider that previously only participated in congestive heart failure would now be required to also take on cardiac arrythmia and acute myocardial infarction.

This deviates from the approach many participants took when BPCI began in 2013, when episode selections were often unrelated to each other, such as lower extremity joint replacement (LEJR) and chronic obstructive pulmonary disease (COPD). While the varied episode selection was considered a means of spreading risk, it also had the unintended effect of targeting bundled payment strategies to different clinical staff, thereby diluting the cohesive strategies the hospital and services lines intended to implement for bundled episodes.

By selecting a CESLG, a participant in BPCI Advanced is now engaging the full service line in a wider selection of conditions. With CESLGs, some episodes will succeed, and some may not, but the overall outcomes are still focused on the general performance of the service line group.

The old adage, “a rising tide lifts all boats,” applies here. The positive performance of some over time may create a halo effect on the others, lifting the long-term performance of all.

The providers that are having most success in bundled payment, particularly in clinical groupings, rely on peer learnings, industry expertise and robust analytics on claims data.

Health systems that participate in a bundled payment collaborative benefit from a safe environment in which they can seek guidance and debate best practices – leaning on shared experience and learnings to drive results jointly. Beyond the peer learnings, top performers regularly conduct deep-dives into claims data with episodic detail, enabling more informed decisions to improve performance.

For participants in Premier’s Bundled Payment Collaborative, the proof is in the pudding. In the latest BPCI Advanced reconciliation, more than 90 percent of members already engaged in the service line approach saw marked increases in total savings. For example, clients participating in both stroke and seizure conditions, which comprise CMS’ Neurological Care CESLG, earned 110 percent more savings on each patient episode compared to providers that participated in stroke alone.

To optimize performance in CESLGs, some providers are participating in a clinical cohort that develops a framework around service lines. The cohort reviews key strategies for enhancing work around clinical episode groups and share successes and opportunities when moving toward a service line approach. Importantly, participants hear case studies of those who have already implemented care redesign efforts as a launchpad for success.

As CMS pushes providers to document quality and cost savings more, bundled payments offer a safe and efficacious way to practice and excel at value-based care.

If participation in bundled payments is like riding a bike, CMS has made it clear the training wheels are coming off soon. Forward-looking providers are buckling on their helmets and knee pads now, when the risks are low, so they can avoid bumps and bruises later.

Learn more about how to your bundled payment journey a smooth ride.
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