Trump’s Bundled Payment Program – Better or Worse?

Remember Bundled Payments?

Just three years ago (July 2015) the Centers for Medicare & Medicaid Services (CMS) announced a 90-day mandated bundled payment model called the Comprehensive Care for Joint Replacement initiative (CJR).

That program was based on the Bundled Payments for Care Improvement test program launched in 2011.

In 2016, CMS announced three new bundles, referred to as episode payment models (EPMs) aimed at cardiovascular care procedures including acute myocardial infarction (AMI), coronary artery bypass graft (CABG) and hip/ femur fractures.

In 2017, CMS basically scrapped that.

Of course, when CMS was developing its bundled payment programs, private payers followed suit with their own versions. Today, approximately one-third of all healthcare providers are involved with a bundled payment style program—whether CMS or private payor.

Bundling is a middle ground between fee-for-service reimbursement (in which providers are paid for each service rendered to a patient) and capitation (in which providers are paid a “lump sum” per patient regardless of how many services the patient receives), given that risk is shared between payer and provider.

New Boss, Same as the Old Boss?

According the new head of CMS, Seema Verma, the essential problem with the three expanded bundled payment programs was that they were mandatory. They should, she said, be voluntary. And since voluntary is better, she says, the new program is an improvement—hence the name “the Bundled Payment for Care Improvement (BPCI) Advanced Model”.

We sat in on a seminar at American Academy of Orthopaedic Surgeons (AAOS) on this very topic and, lucky for us, Seema Verma, was there.

Here’s what we learned.

Two Bundled Payment Programs Were Canceled

Last November (2017), CMS tossed out two of the three mandatory bundled payment programs and slashed the number of providers that had been required to participate in the third bundled payment program—the Comprehensive Care for Joint Replacement Model (CJR).

Now, only 34 geographic areas will be required to join CJR, down from 67 originally. That will supposedly save about $106 million.

In the pre-Trump plan, 800 acute care hospitals were going to be part of the bundled payment scheme. Under this new more voluntary plan, the number is 470. Importantly, these changes were announced after CMS decided to allow Medicare payments for outpatient knee surgeries.

Seema Verma is careful to say that BPCI is not all that different from the Obama-era plan, “BPCI Advanced builds on the earlier success of bundled payment models and is an important step in the move away from fee-for-service and towards paying for value. Under this model, providers will have an incentive to deliver efficient, high quality care.”

In other words, we’re still bundling payments.

BPCI Advanced Model is also referred to as Advanced Alternative Payment Model and will officially start enrolling patients in October 2018 and will run through the end of 2023.

But, and this is key, it will incentivize more outpatient (and presumably less expensive) care.

Is CMS Putting Doctors (or Patients) at Risk?

Wilford K. Gibson, M.D., chair of the American Association of Orthopaedic Surgeons’ Council on Advocacy expressed both support and reservations.

In terms of CMS, Dr. Gibson said, “We will continue to work with CMS to increase opportunities for specialty participation within the Quality Payment Program and to ensure that physician payment reform ultimately improves the care of musculoskeletal patients.”

But, in terms of the BPCI, he said, “Medicare will be saving millions, but doctors are at risk due to the payment method. There are some winners and some losers with the new model.”

He added, “If you are a traditional Medicare patient, you will not see much difference, but the hospital stay will be curtailed, and more emphasis will be placed on rehab at home. They are emphasizing home care in order to cut costs for better outcomes.”

“We hope that BPCI Advanced will improve and coordinate patient care while qualifying orthopedic surgeons under the Advanced APM track. BPCI Advanced has some difficulties and risks for physicians. The new model has some risk but also potential for gain as target price is fixed”.

Will Private Payors Follow CMS’s Lead?

UnitedHealthcare, the largest private payer, told OTW, “We’ve seen a positive response from physicians to value-based care models, including bundled payments. That is validated by the fact that UnitedHealthcare‘s provider reimbursements that are tied to a variety of value-based care arrangements have nearly tripled in the last three years to $64 billion annually and are expected to reach $75 billion by the end of 2020.”

He added, “To date, more than 15 million people, or nearly one in every three people enrolled in UnitedHealthcare benefit plans, currently access care from providers in value-based care relationships.”

“It is important that we remain flexible with care providers because there isn’t a ‘one size fits all’ approach. We’re able to meet individual care providers where they are in terms of their readiness to shift to value-based programs and help them succeed. He added, “Having some form of shared risk really activates the relationship because the care providers are more engaged, and we see both quality and efficiency improve.”

Dr. Daniel Murray, who is Chief Medical Officer for OptumCare, a subsidiary of UnitedHealth Group, Inc. spoke about this strategy at the AAOS round table conference. He explained how he aligned incentives for optimized care and lowered cost as a CEO/spine surgeon at OrthoCarolina Surgical Group. He also shared that through better understanding of patient needs/advocacy, he was able to reduce cost 30% and reduce complications by 30%.

Additionally, Dr. Murray discussed procedures and programs that increased patient care, while lowering costs utilizing innovative payment models. He also talked about substantial changes in Comprehensive Care for Joint Replacement precedence in the new model.

AAOS Letter to CMS Administrator Seema Verma

William J. Maloney, M.D., President of AAOS, raised five concerns to CMS Administrator Seema Verma in a letter to her. He said:

1. Precedence to comprehensive care for joint replacement (CJR) over BPCI Advanced could limit the participation of independent physicians and their ability to participate in BPCI would be outside of Lower Extremity Joint Replacement (LEJR) episodes.
2. The policy could hurt the physician-patient relationship, as it will disrupt the Medicare beneficiary’‘s Lower Extremity Joint Replacement LEJR care that will be moved to the hospital from the physician. This can lead to reduced participating physician group practice engagement.
3. The policy is built on payment of performance on 32 clinical episodes.
4. The initial application is too complex and burdensome for smaller practices with limited resources and capabilities.
5. CMS has not clearly delineated the requirements of this policy implementation. This lack of clarity from CMS will lead to defaulting all TKA [total knee arthroplasty] procedures to outpatient status which would affect the CJR, BPCI and BPCI Advanced models.

AAOS is concerned that this move will be too risky for medically complex cases and high comorbidity patients, who need hospitalization.

What the Data is Showing So Far?

The Lewin Group authored a report—“CMS Bundled Payments For Care Improvement Initiative Models 2-4: Year 3 Evaluation and Monitoring Annual Report October 2017” which quantified the effect that bundled payment programs had on Medicare costs and quality of care.

According to their study, the Lewin Group authors wrote that the average decline in costs between October 2013 and September 2015 was $1,105 per case in non-fracture episodes. Importantly, the researchers found that there was no change in quality despite the lower costs.

It should be noted, however, that the study was limited to only hospital participants.

The Lewin Group also reported that physician group practices (PGP) realized LEJR cost savings of $3,214 or 15% per episode as compared to the 2009-2012 historic baseline period.

We also learned at the AAOS seminar that other groups had documented $12.6 million in savings at 40 CJR hospitals from 3Q2016 to 2Q2017.

AAOS shared data at the seminar which compared the effects of BPCI on physician groups versus acute care hospitals. The result? Physician group practices performed much better than acute care hospitals under the bundled care model.

Going Forward

AAOS and other specialty and state societies are clearly raising the alarm about CMS’ body language in favor of an outpatient model. CMS, says AAOS and its affiliated societies, should do more to protect Medicare beneficiaries.

Specifically, CMS should remove TKA from the outpatient setting or, at the very least, establish evidence-based outpatient inclusion and exclusion criteria for patients.

Finally, AAOS in its letter to CMS Administrator Verma called for clarity and timely details on benchmarking and target pricing.