Value-Based Care News

Commercial Payers Behind CMS in Bundled Payment Models

When compared to CMS, private payers have not invested as many resources in adopting bundled payment models.

By Vera Gruessner

The Centers for Medicare & Medicaid Services (CMS) have heavily invested in pursuing bundled payment models as an alternative form of payment for medical care among Medicare beneficiaries. Commercial payers, however, have been more slow to adopt bundled payment models and value-based care reimbursement.

Value-Based Care Reimbursement

While CMS has implemented programs like the Bundled Payments for Care Improvement (BPCI) Initiative - which pays a specified amount for beneficiaries based on an episode of care - private payers have fewer options available for contracting through value-based care reimbursement. A Premier survey shows that providers are not finding private payers looking to invest in value-based care or bundled payment models.

In fact, 66 percent of polled C-suite executives stated looking to create their own health plan or work with another provider-sponsored health plan due to the fact that few commercial health plans offer value-based care contracts. Dave Terry, CEO of Archway Health, also described how private payers are behind CMS when it comes to adopting bundled payment models.

“At Archway Health, we’ve been involved in the Medicare bundled payment programs since Medicare created them in 2011,” Terry told HealthPayerIntelligence.com. “We’re focused on helping providers and payers build and manage effective bundled payment programs. We are a convener in the BPCI program. Several dozen providers who we work with are in that program as episode initiators. We work with physician groups, hospitals, nursing homes, and home health agencies - all of whom are episode initiators and preferred providers within the BPCI program. We have about 15 provider organizations that are in the oncology care model initiative with Medicare.”

“As a convener in BPCI, we have a contract with Medicare and we help manage and facilitate that contract,” he continued. “We spent a fair amount of time with payers in the commercial market talking about bundled payment programs and it’s been slower adoption on the commercial side than what we’ve seen in Medicare. Some of the things payers tell us is that they don’t have the mechanisms to pay a bundle in their systems. They’re concerned about how equipped the providers are to take risk in those programs. We’ve heard uncertainty on how to define the bundles. Payers are concerned about how it gets complicated on a larger level.”

Additionally, Terry explained that payers have conflicting opinions on how to best price bundled payment models. However, Terry’s experience with Medicare’s bundled payments and providers’ results shows that it may be not as complex as private payers think.

It may look daunting on the surface, but bundled payment models may be easier to handle than an accountable care organization, Terry said. The Archway Health CEO also offered some key pieces of advice for payers looking to implement bundled payment models.

“There are couple of things [payers can do]. First, just get started,” he noted. “It can be complicated and there can be a lot of hurdles that slow or stop folks from doing these things. What we‘ve seen from payers and providers who are committed to doing this is that they can get through those hurdles. So just getting started and committed to getting a few bundles out in the market is one piece of advice. The second piece would be to start with the data.”

“The great part about what Medicare has done and what some states have done is made a tremendous amount of claims data available. We need to get the data in the hands particularly of the specialists including oncologists, orthopedic surgeons, cardiologists, and neurologists,” Terry suggested. “If we can get the data on the cost of an episode, the process and where the dollars go in the hands of the specialists, they really start to think differently on how they can improve the process and where the opportunities are. It really helps to drive better care and we’re seeing significantly lower cost. My three pieces of advice are to get started, share data, and get the specialists engaged in the process.”

Terry also described how some commercial payers are following the lead of CMS when it comes to adhering to similar quality measures and bundled payment models while other insurers are basing reimbursement structures on their own experience.

“I think it’s a mix. In some cases they do [follow CMS], but it can be a challenge for a commercial health plan. In some cases, they can follow the lead in terms of the definitions that CMS is using for their bundles and their quality metrics and that translates pretty well. In other cases, the Medicare population can be quite different from the commercial population,” Terry stressed. “The patient issues and where the volume is can be different in commercial than Medicare. The metrics can be different.”

“We do see plans starting to study more closely what Medicare has done and figure out how they can tweak that so it works for them as opposed to reinventing the wheel, which is a strategy that makes a lot more sense,” observed Terry. “The other discussion we have with plans is about a ‘crawl, walk, run’ approach. Medicare got started in a pretty straightforward way. They created a contract, providers came into the contract, and they started to move and make progress. We’re starting to see some of the plans take that approach.”

Terry also discussed some of the outcomes of using bundled payment models among the Medicare population. The results have been positive, but not enough providers are currently operating CMS bundled payment models to draw any specific conclusions yet.

“There are some positive results, but the overall theme is that they don’t yet have enough data and sample size from the first few quarters … to draw too many conclusions,” Terry explained. “We have seen significant improvements in process and outcomes in things like reduction and readmissions. Patients are transitioning to home faster. There is more engagement between patients and providers. We’ve seen significant reduction in cost."

 

Dig Deeper:

How to Overcome the Challenges of Bundled Payment Models

How Payers Should Prepare for Value-Based Reimbursement