Bundled Payment Models as a Path to Health Care Transformation

As President Trump observed, health care is complicated. At Remedy, the episodes of care company, we believe the most effective way to approach complexity is to break it down into component parts and tackle them sector by sector. Simplification through prioritization. By reorienting how we pay for care to align with how patients experience it and clinicians deliver it, bundled payments provide the platform to do just that.

CM: Yes. Bundled payments restructure how we pay for healthcare to match the patient experience. By incentivizing physicians, specialists, hospitalists, and other clinicians to be accountable for what happens to a patient for months following a clinical diagnosis or procedure, bundled payments reduce fragmentation of care and enable clinicians to tailor treatment to individual circumstances.

There is bipartisan support for bundles, with roots dating back to the first Bush Administration. Secretary of Health and Human Services Dr. Tom Price has said he is supportive of voluntary bundled payment models; organizations like The Heritage Foundation and the American Medical Association have endorsed bundled payments as models for reform. CMS has put stakes in the ground to expand bundled payment initiatives for the Medicare Fee-For-Service (FFS) population over the coming years. States have incorporated bundles into Medicaid programs. Payers are integrating bundles into provider network contracting methodologies in health plans serving Medicare Advantage and under-65 populations; providers ask for bundled payment solutions in support of all their patients. This momentum positions bundles to play a central role in health reform efforts.

CM: Decades of evidence show that bundled payments work. Representing $10 billion in medical spend, Medicare's voluntary bundled payment model initiative, Bundled Payments for Care Improvement (BPCI), has become the most recent proving ground. The program sets a fixed discount on historical costs for 48 bundles, incorporating 179 DRGs. BPCI builds on the notion that bundles are most effective in tackling areas where there is significant variability in spend, as in post-acute care.

In 2017, Remedy together with our partners will deliver 7.7% savings, while maintaining or improving quality levels on close to 300,000 patient episodes in BPCI. This equates to $120 million in savings to CMS.

CBO has projected that even targeting a small subset of Medicare FFS spending – 90 day episodes triggered by an inpatient stay – would yield $47 billion in savings through 2023. Given the opportunity to expand the scope of bundles to include other services and populations, that's just the beginning of what we can achieve.

CM: We receive positive feedback about participation in bundled payment programs, often citing the benefits of aligned incentives within a time-based framework. Clinicians share they are better able to deliver quality care because they are newly empowered to engage in decisions about where a patient receives rehabilitative and follow-up care.

One of the orthopedic surgeons participating in Remedy's bundled payment program observed that BPCI makes "a substantial difference in the way we practice medicine for the better. We're more aggressive about getting patients out of bed quicker, out of the hospital, and back home safely."

CM: Bundled payment programs will continue to advance market-based reforms, strengthening the doctor-patient relationship while reducing reliance on government regulation to drive change. Bundles address the limitations of fee-for-service and other payment models by increasing transparency in cost and quality, integrating specialists into reform efforts, and introducing approaches that are scalable and replicable across populations, settings and geographies. They enhance control over healthcare dollars by facilitating consumer-driven solutions like episode-based benefit plans. Bundles provide the building blocks to facilitate reform efforts like combining Medicare Parts A and B and administering block grants for Medicaid programs.

To reduce the fragmentation of care and to treat patients as individuals, bundles will expand beyond medical spend to include pharmacy, behavioral health and social determinants so that we can – finally – treat the whole person, providing access to quality care where and when we need it most.

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