Bundled Payment

Bundled Episode “No-Go” Zone

September 27, 2018 9:31 am

In March 2019, provider organizations participating in the Bundled Payments for Care Improvement Advanced (BPCI-A) model will have a one-time chance to drop episodes in which they are losing money. For this month’s launch of the model, providers can be liberal in selecting episodes for participation because doing so allows them to obtain more data on their performance. The caveat is that being too liberal can be a distraction to the work at hand. If an organization elects to start broadly, it should make sure it clearly understands the care redesign interventions it will need to execute to ensure success.

Here are five recommendations of factors that constitute the “no-go” zone, where organizations should eschew participating in bundles.

Small populations. If an organization lacks a sufficient sample size to distribute the risk, everyone loses. To ensure an adequate level the actuarial risk, the population under consideration should not have fewer than 150 patients per year. And for a chronic disease, the number of cases may need to be higher.

Gaps in clinical performance. Given the retrospective nature of data, quality gaps in performance generally take 12 to 18 months to fix, whether the root cause is process- or outcome-related. Even if an organization has resolved high readmission rates for a population, the organization should not expect that payers will see the improvement until a year or more later. To address this problem, organizations should put their populations on evidence-based protocols and validate that the gaps in clinical performance quality have indeed been resolved—and only then take risk.

Low price point. Taking clinical and financial risk requires investments in care redesign, telehealth, care navigation, claims analysis and reporting, and more. But providing a better clinical outcome and a better cost outcome is not a race to the bottom. It requires moving beyond historical cost-shifting approaches and being willing to pay for and value the importance of gold-standard care redesign and care management. If insurers aren’t willing to pay for care management, then most chronic disease DRGs, for example, would likely involve too low a price point for a bundle and would be better managed in under a per-member-per-month approach.

Unnecessary actuarial risk. Most executives and clinicians believe that they can improve on their historical performance and perform better than their competitors. But if a provider is losing money on a population, its priority should be to focus on fixing that problem first. Organizations should make sure that they are establishing a favorable foundation at the outset to the extent possible. An organization always can scale up complexity if it has in place a foundation of success from which to build.

Lack of physician support. Healthcare payment reform is essentially care delivery reform. It matters less where a provider organization starts than that the start includes a strategy that physicians feel a part of and can lead. New payment models should be a means for provider organizations to further integrate clinically with their medical staffs. The work necessary to drive clinical redesign is real and substantial, and it requires physician leadership, enthusiasm, and engagement. 

A healthcare provider organization cannot expect to succeed with risk that it is not clinically, operationally, actuarially, and culturally ready to tackle. The key is to follow the evidence and set physicians, staff, and patients up to win at the outset.

See related article: Preparing for BPCI-A: Avoiding the Common Mistakes Providers Make when Implementing New Payment Models

Deirdre M. Baggot, PhD, MBA, RN, is an independent healthcare business strategist; former lead, Acute Care Episode Program, St. Joseph Hospital, Denver; and former expert reviewer, Bundled Payments for Care Improvement Program, CMS. 


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