The Centers for Medicaid and Medicare Services (CMS) is expected to announce Bundled Payments for Care Improvement (BPCI) 2.0, also known as Advance BPCO, soon.  Healthcare bundled payments are quickly emerging as a popular alternative payment model (APM) for providers to transition away from the traditional fee-for-service payment model under Medicare Access and CHIP Reauthorization Act (MACRA).

What hospitals need to know about healthcare bundled payments

Is your hospital prepared to participate in CMS’ bundled payment program?

The top challenges of healthcare bundled payments include achieving scale, leveraging post-acute care resources, and managing uncontrollable costs. – RevCycle Intelligence

Goals of this method include a decrease in healthcare costs and improvement in quality of care. While revenue benefits are possible under this program (see RevCycle Intelligence’s article on how a Texas health system saw nearly $6.1 million in cost savings under a bundled payment initiative), challenges to reaching financial success still exist. We explore the concept of healthcare bundled payments; challenges faced by providers under this model; and upcoming changes to this program.

What Exactly are Bundled Payments?

CMS explains: “The Bundled Payments for Care Improvement (BPCI) initiative is comprised of four broadly defined models of care, which link payments for the multiple services beneficiaries receive during an episode of care. Under the initiative, organizations enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality and more coordinated care at a lower cost to Medicare.”

What Will the New BCPI Program Look Like?

Home Health Care News interviewed Clay Richards, CEO of naviHealth, a post-acute care transition company that relies heavily on bundled payments. He shared his understanding of the new bundled payment initiative. Richards explains how the new BPCI program will follow suit of the current BCPI program, model 2 in particular.

According to Richards, CMS has gathered feedback regarding data and pricing to take some lessons from the initial few years this has been in effect in order to make the pricing model more attractive to larger companies. A more standardized approach is the key factor needed to bring larger players to the field by providing greater predictability. The program is also set to undergo overall expansion. Richards is quoted stating:

“It’s been incredibly important to have quality home health partners to work with. We have seen that an increase in home health utilization has a corresponding decrease in readmissions, which is exactly what the program aims to accomplish.”

Providers to Overcome Challenges Posed by Bundled Payments

Providers will face substantial challenges in the face of bundled payment implementation. RevCycle Intelligence lays out three areas that must be addressed in order to reach financial success under this program:

  • Achieving Economies of Scale:  According to a researcher in a PricewaterhouseCoopers Strategy& survey (PDF): “Scaling up — along with multiple dimensions — will be a major challenge to those currently implementing bundles (and those that eventually follow). Scaling up includes increasing the percentage of patients using a specific bundle, adding additional bundle sets, pushing the beginning and end points on the spectrum of care, extending the facilities and geographies where the bundles are available, and expanding the number and scope of partnerships through which the bundles are marketed and delivered.”
  • Controlling Costs by Leveraging Post-Acute Care Partnerships: Under the health care bundled payment model, a provider’s financial accountability is not limited to only the time spent in the hospital setting, but the entire care episode. Therefore, this cost could cover just a few days in the hospital or up to 90 days in a post-discharge facility. How should providers address this challenge? It’s important that hospitals partner with high-value post-acute care facilities. How does one identify such a provider? A survey from Deloitte explains that providers can utilize the following data sources to identify post-acute care partners that are high-value:
    • Claims data through an alternative payment model
    • Hospital readmission rate data according to post-acute care facilities, providers, and conditions
    • Data self-reported by post-acute care facilities (special attention to lengths of stay and readmissions)
    • Clinician feedback about their experience dealing with specific providers
    • Medicare star ratings
    • Post-acute care quality and cost performance commercial claims data

Managing costs that are out of control of the provider: An article from the American Journal of Managed Care quotes Joshua Cohen, Ph.D., Research Associate Professor of Medicine at Tufts Medical Center: “There are situations where using a bundle may be inappropriate because the factors that are influencing differences in cost among patients are things that the provider doesn’t actually control. For example, you might have a range of patients who have different comorbidities, and some of them are very high risk, and hence would be expensive and that’s not the fault of the provider. And sometimes they are things that can be controlled by the provider. And sometimes, you can’t even tell. That’s what really makes things complicated.”

Is Your Hospital Ready to Handle Bundled Payments?

At The SSI Group, we develop software that helps hospitals and providers get paid faster and more efficiently. Our Patient Access suite of modules, including Pricing Estimation and Eligibility, provides a powerful synergy of integrated information from multiple verification sources, along with intelligent guidance for staff to help reduce costly errors. — helpful for dealing with healthcare bundled payments.

Another potential pain point for hospitals in the bundled payment equation is the lack of health IT software designed to collect and report on financial data. According to an article in RevCycle Intelligence: “Using a robust data analytics program can be beneficial for analyzing the quality and outcome improvements as well as cost efficiencies.”  Earlier this summer, we released our new Analytics 2.0. Eric Nilsson, our CTO, explains: “The solution provides the latest analytics technology, designed around an organization’s revenue cycle key performance indicators (KPIs). With access to data at their fingertips, users can visually interact with data for easier insights into revenue cycle performance. Users can drill down to pinpoint the most critical issues and easily share across the organization.”

Request a demo of SSI Group revenue cycle software solutions today to learn more about how we can help you meet the healthcare bundled payments challenge.