CMS Bundled Payment Models Lead to Greater Patient Selectivity

January 27, 2017 - What are some of the biggest problems around bundled payment models and value-based care causing difficulties for physicians? According to Corporate Director at Willis-Knighton Health Systems Chris Mangin, the Comprehensive Care for Joint Replacement Model from the Centers for Medicare & Medicaid Services (CMS) leads providers to refuse joint replacement surgery for patients at higher risk of complications.

Since CMS bundled payment models position financial incentives for superior patient health outcomes, providers participating in the Comprehensive Care for Joint Replacement Model as well as other bundles tend to move patients at higher risk of complications toward hospitals not participating in these payment programs.

“We were not selected to participate in the Comprehensive Care for Joint Replacement Model, but around us, we have a city that is about an hour and a half away that was, another city that’s a little over an hour away, and New Orleans was also selected,” Mangin said. “When you start looking at bundled payments and it hits the areas around you, what we noticed immediately was that the places that typically do a large number of joint replacements began to change.”

“For example, when seeing 50 patients that came in and, in the past, one would have determined that all 50 of those patients were appropriate for a total knee replacement surgery,” Mangin continued. “Now that one’s facility is under a bundled payment system and the physician doesn’t want a lot of outliers, the providers really want patients that will have good outcomes and start to select a little bit differently. That 50 may turn into 40 patients that they’ll now do surgery on.”

Where do the rest of the patient still in need of joint replacement surgery go? Many end up at hospitals that are not operating under a bundled payment model. In this case, Willis-Knighton Health Systems was located more than an hour out of these patients’ neighborhoods.

READ MORE: Bundled Payment Models Need to Align Payer, Provider Incentives

“Those other 10 patients still need a hip or knee replacement, but the problem is nobody in their area is going to do it because they are the sicker patients. They end up going to the place that isn’t under the bundled payment model,” Mangin added. “What we started seeing here was overflow from those cities and patients coming and telling us that they said they don’t do complicated joint replacement surgeries and the experts were here.”

“In years past, we had never been the experts, but now that they’re under the bundled payment system, we’re the experts and we’re taking more difficult patients,” Mangin said. “CMS says that’s not supposed to happen and they will watch that, but we see it all the time. It’s really a function of people understanding how to play the game. That’s something they’ll have to look at and, ultimately, that’s why they might make the bundled payment model mandatory for everyone.”

Mangin went on to discuss how the actions of CMS play a large impact on the way commercial health insurance companies operate. For example, when CMS began moving in the direction of value-based care reimbursement and bundled payment models, national private payers began aligning their initiatives in this direction as well.

“CMS typically sets the bar and allows providers to look around and think that if CMS is playing this game, we need to anticipate what other insurers are going to do,” Mangin added. “It’s nice to get some perspective of how other organizations are dealing with the latest CMS initiative or bulletin. If someone else has already been handling CMS payments or rules, it’s nice to have something from other organizations to prepare.”

“As we watch the market and we see CMS creating a program, we expect the Blue Crosses, UnitedHealthcare, Aetna, and Cigna do something similar. We see something from them that is a little bit more palatable - they’re looking at quality and they want to see that you are decreasing the number of premature births or that your c-section rates are going down. There are true quality metrics out there that commercial payers look at.”

READ MORE: CMS Bundled Payment Program Reduces Costs for Consumer

By focusing on quality metrics, commercial payers are creating an environment where providers are able to alter their clinical practices and strive for excellence. Mangin urges healthcare payers to expand patient-centered and science-based decision-making instead of focusing as much on the financial aspect of patient care.

“All of us are going to be dealing with alternative payment models,” said Mangin. “If payers can do their best to make it patient-centered, scientifically-based, and evidence-based, then that’s a better approach than what we typically see where it is financially-based. If the basis is truly on quality and not on finance, it will be better received.”

“We’re going out there and trying to make relationships with Johnson & Johnson or any other company to find out a better way for patient care. Those things are not free so we’re spending a lot of our assets and resources to accommodate for these changes coming from commercial insurance or CMS,” Mangin said.

As such, payers will need to understand that significant financial penalties may not be the best route to take when contracting with providers that have already invested funds in renovating their practices to align with value-based care principles. Additionally, payers are advised to align their payment structures and rules to that of CMS in order to improve overall consistency in healthcare delivery.

“Whether it’s Medicaid, Medicare, or a Blue Cross Blue Shield patient, we’re treating them all the same. The payer source doesn’t matter to us, but if we have to play by different rules depending on which payer we’re dealing with, that’s not fair to the organization,” Mangin concluded. “We need to settle on what the rules are and make that consistent for everybody across the board. If CMS wants to set the rules and everyone plays along, then that’s great. For us to be mandated to treat people differently because of their payer source isn’t fair to the organization. There needs to be a more consistent approach to healthcare.”