• Web Extra: A Health Plan’s Perspective on Bundled Payments

    Lola Butcher Jul 28, 2016

    Blue Cross Blue Shield of North Carolina (BCBSNC) has three “bundle partners”—two physician practices and one health system—for joint replacement surgeries. The insurer paid for nearly 7,000 joint bundles in 2015, accounting for about 35 percent of all the joint replacements among its members.

    And it is just getting started. BCBSNC is expanding its bundled payment arrangements for joint replacements this year and eyeing the national stage, where bundled payments are being used for maternity care, bariatric surgery, and management of chronic conditions such as diabetes.

    “Bundled payments are structured in such a way as to create the appropriate incentive for providers to be actively engaged across the continuum of care while placing an important emphasis on care management,” says Amber Maxwell, senior strategic contract consultant for BCBSNC.

    BCBSNC sees bundled payments—and the care models required to succeed in those arrangements—as one way to control rising healthcare costs, and Maxwell thinks health systems are beginning to share that vision.

    “Providers are becoming aware that the traditional payment models are no longer sustainable,” she says. “More and more providers understand that care coordination and value incentives are not only going to be more prevalent with payers, they will become the new normal.”

    Even so, Maxwell says many health systems that express interest in bundled payment arrangements do not understand what is involved. She sees several red flags:

    Expecting extra pay to support the transition to a new care model. “Providers requesting a price that is above and beyond traditional reimbursement levels are not ready to implement a bundle of any kind,” she says.

    The goal of a bundled payment contract is to improve patient outcomes while squeezing wasteful spending out of care processes. “The lower price point and the single bill to the member will increase steerage to bundled providers,” she says. “If a provider is discussing a traditional increase in their payment, it is a red flag that they do not fully understand the intent of the bundled arrangement.”

    The assumption that all bundled payment contracts are the same. “All too often providers want to discuss bundled payments but are not aware of the various bundled methodologies that are utilized by various payers,” Maxwell says. “Lack of knowledge of how potentially avoidable complications are derived [in the contract] as well as what components make up the total payment of the bundle puts providers at a disadvantage.”

    Failure to understand the importance of care coordination and care management. “If a provider group doesn’t have strict processes and protocols in place, a bundle will not be successful,” Maxwell says. “In my experience, effective care management is the most important factor in the success of the bundled payment arrangement.”

    Collaboration and data sharing between health plans and providers are critical to bundled arrangements. Providers must share quality-related data, while plans can share claims and outcomes data.

    “Bundled payment arrangements carry with them some degree of risk for both parties,” Maxwell says. “It is imperative that providers and payers approach discussions and negotiations collaboratively and structure contracts and processes with the success of the partnership in mind.”


    Lola Butcher writes about healthcare business and policy topics for HFMA.

    Interviewed for this article: Amber Maxwell, senior strategic contract consultant, Blue Cross and Blue Shield of North Carolina, Durham, N.C.

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