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Should CMS Incorporate More Bundled Payment Programs?

Humana is one health payer that has partnered in adopting bundled payment programs within its practice.

By Vera Gruessner

Last month, the Center for American Progress (CAP) issued a statement urging the Department of Health & Human Services (HHS) to expand their work in bundled payment programs so that medical costs would decrease and even greater focus can be positioned toward value-based reimbursement.

Bundled Payment Models

Essentially, the group finds that the bundled payment programs could aim to do even more than the original plans. At this point in time, the Center for American Progress is satisfied with the results of the bundled payments being used to cover Medicare spending related to joint replacement surgeries and post-surgery care.

The program is called the Comprehensive Care for Joint Replacement Model and is being operated through the Centers for Medicare & Medicaid Services (CMS). Future strategies could aim to bundle reimbursement for common medical procedures and geriatric conditions.

Bundled payments vary greatly from the typical fee-for-service payment strategy where providers receive reimbursement for every medical procedure completed. In bundles, healthcare providers receive reimbursement based on an entire episode of care from the initial hospitalization through post-acute care facilities and even medication coverage.

Humana is one health payer that has partnered in adopting bundled payment programs within its practice. In particular, Humana’s Medicare Advantage members will participate in bundles monitoring hip and knee replacement surgeries. spoke with Chip Howard, Vice President of Payment Innovation at Humana, to learn more about the payer’s transition to bundled payment models and how other insurers could follow their example.

READ MORE: Are Bundled Payment Models or Capitation the Better Choice?

“I would really start with an overall piece of advice around looking at retrospective versus prospective payments for bundles. Retrospective is essentially fee-for-service where providers are getting paid as usual, but at the end of a performance period, the cost of the bundle is reconciled versus the cost target and savings are evaluated and shared,” Howard explained.

“The prospective model is the upfront payment to the provider responsible for the bundle: the fixed rate that is intended to pay for all bundled services. I won’t advocate for one method or the other, but I do think from the payer perspective, there are some things to think about with prospective bundling around changing infrastructure and claims systems to be able to accommodate the upfront payment versus the traditional fee-for-service world,” said Howard.

Howard also offered important tips for how to create a successful bundled payment contract between payers and providers. A strong partnership will be essential for a well-functioning bundled payment model.

“It is important to make sure that you’re partnering with providers when doing a bundled payment arrangement. It is not going to be successful unless both the payers and providers are successful,” Howard pointed out. “From a contract perspective, I would suggest  looking at a glide path to what I would term provider full-accountability.”

“In other words, this would mean the provider sharing in the ups and downs of the financial results. I think you should take a measured approach to that and not go immediately to a full-value accountability type of arrangement with a provider,” he concluded.

READ MORE: Bundled Payment Model Attracts More Oncologists than Expected

The Comprehensive Care for Joint Replacement Model is only one of the several bundled payment programs being operated by CMS today. The federal agency has also been putting its resources into managing the Bundled Payments for Care Improvement (BPCI) initiative, which consists of four models of care that covers the costs of an acute episode of care beginning with a hospital stay.

This past April, CMS announced that a number of medical facilities have the option to extend their participation in this bundled payment program. Those operating in models 2, 3, and 4 have the option to continue participating in the Bundled Payments for Care Improvement initiative until September 30, 2018.

CMS has decided to extend the program in order to further analyze the benefits of value-based care and bundled payments in their attempt to reduce the growth rate of healthcare costs within the Medicare program. Additionally, CMS hopes to evaluate whether bundling these payments also brings better health outcomes for Medicare beneficiaries.

The federal agency is putting many of its resources into bundled payment programs, but it is expected to bring significant returns. As such, it is beneficial for CMS to continue investing in bundled payments for years to come in order to bring value-based reimbursement as a main form of payment throughout the healthcare industry.


READ MORE: Joint Replacement Bundled Payment Cut Costs, Maintained Volume

Dig Deeper:

CMS Continues to Reform through Healthcare Bundled Payments

How to Prevent Healthcare Underuse in Bundled Payment Models


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