How to Design a Successful Bundled Payment Program

How to Design a Successful Bundled Payment Program

Health industry experts agree that bundled payments are one of the most important strategies that will help health care in the United States transform from a volume-based to a value-based system of care. An alternative payment model that sets a single, fixed price on an entire episode of care, bundled payments show huge promise for reducing care costs, improving care quality, and increasing provider access to new revenue sources. As more and more providers look to make bundled payments a key part of their approach to reimbursement, here are some important best practices to keep in mind when designing a bundled payment program.

Get the right team together.

teamImplementing an alternative payment model like bundled payments requires the involvement, expertise, and support of many different provider departments. Physicians, management and administrators, outside providers: these and any other potential participants should be engaged from the very beginning of the bundled payment planning and design process. Gaining buy-in during the early stages will greatly increase buy-in when the time comes for implementation, so it’s important not to neglect these initial conversations and planning sessions.

In order to help properly align incentives, set goals and objectives, and clarify details around the new care delivery model, providers and administrators alike need the opportunity to openly discuss key issues, provide feedback, and ask tough questions. By building a collaborative and communicative team at the start, providers are much more likely to arrive at a final bundled payment program that is robust and successful.

Take advantage of data.

Big data is driving improved decision-making across the entire health care industry, and alternative payment model design is no exception. Through the Centers for Medicare and Medicaid Services, applicants to the Bundled Payments for Care Improvement program (BPCI) can access historical Medicare claims data to help define episodes and identify important areas of opportunity.

By examining figures such as readmissions associated with specific inpatient cases, providers can get a better picture of what is happening to patients during the different stages of their episode of care, and can thus more accurately pinpoint external cost saving opportunities. Providers considering bundled payment programs should therefore be sure to take advantage of any and all available data that can be leveraged to create an effective program design.

Assess the financial impact.

dataAnother important data set that a provider must thoroughly analyze is its internal cost-accounting data. This helps determine internal savings opportunities—through improving care processes or reducing variation, for example—and is thus essential in offering providers a clearer idea of the true financial impact of a bundled payment model. It’s also important for providers to understand that savings arising over an entire episode of care may not necessarily lead to a proportionate benefit for the provider itself.

Define the gainsharing model.

A clearly defined gainsharing model is a critical component of a successful bundled payment program, because it lays out how the potential savings from the bundled payment model would be shared among physicians and other external providers. This can be a delicate conversation to negotiate, but it’s one that is vital to have early on and openly, so that the entire team is on the same page. To ensure that the gainsharing model is fair and reasonable, providers should consider important factors like which participants will be exposed to the greatest risk if costs for a particular episode of care turn out to be higher than anticipated.

Define the episode.

Under the BCPI program, there are a number of different options for defining exactly what constitutes an episode of care; these include the length of the inpatient stay in a general acute-care hospital, the inpatient stay plus a period of post-acute care comprising anywhere between 30 and 90 days after discharge, or solely the post-acute care period. The definition of the episode of care is perhaps the single greatest factor that will influence reimbursement under a bundled payment program, so providers should be thorough about this step. Careful consideration of existing resources and preparedness for clinical risk management are a must. Providers must also determine whether any clinical conditions will be excluded, as this will strongly influence episode length.

Focus on the patient.

It’s easy for providers to get caught up in the financial or statistical side of things when designing a bundled payment program, but it’s important not to lose sight of the fact that one of the main objectives (and indeed, one of the most important results) of bundled payments is that they improve patient outcomes. By encouraging better coordination of care and effective and efficient delivery, bundled payments can play a significant role in boosting the patient experience. Providers should therefore make sure that, along with analyzing data sets and establishing key definitions, they are always keeping in mind what’s best for the patient, as this will be the ultimate driver of a successful bundled payment initiative.

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