Early Results of Bundled Payments Model Indicate Reduced Costs, Improved Quality for Several Clinical Episodes, CMS Says

Sept. 20, 2016
The Bundled Payments for Care Improvement (BPCI) initiative has shown promising results to reduce Medicare spending in 11 out of 15 clinical episode groups, according to an analysis of the program in CMS's second annual evaluation report.

The Bundled Payments for Care Improvement (BPCI) initiative has shown promising results to reduce Medicare spending in 11 out of 15 clinical episode groups, according to an analysis of the program in the Centers for Medicare & Medicaid Services (CMS) second annual evaluation report.

In a blog post about the second evaluation report about Models 2, 3 and 4, Patrick Conway, M.D., acting principal deputy administrator and chief medical officer at CMS, highlighted the progress of the second and fourth tracks of the bundled payment program.

“Medicare, more than 1,400 providers are currently participating in bundles through the Bundled Payments for Care Improvement initiative. Early results are encouraging: orthopedic surgery bundles, in particular, have shown promising results on cost and quality in the first two years of the initiative. These models keep the patient at the center of care delivery and focus on well-coordinated, high quality care,” Conway wrote.

According to CMS, 11 out of the 15 clinical episode groups analyzed showed potential savings to Medicare, while noting that future evaluation reports will have more data to analyze individual clinical episodes within these and additional groups.

CMS reported that hospitals participated in Model 2 of the initiative for orthopedic surgery showed “statistically significant savings of $864 per episode while showing improved quality,” as indicated by beneficiary surveys. Beneficiaries who received their care at participating hospitals indicated that they had greater improvement after 90 days post-discharge in two mobility measures than beneficiaries treated at comparison hospitals, CMS also reported.

And, CMS reported that while hospitals in Model 2 did not show any savings per cardiovascular surgery episodes, those hospitals were able to maintain quality of care. “Over the next year, we will have significantly more data available, enabling us to better estimate effects on costs and quality,” Conway wrote.

“These models keep the patient at the center of care delivery and focus on well-coordinated, high quality care,” Conway wrote.

Mark Hiller, vice president of engagement and delivery at Charlotte-based Premier, Inc., said in a prepared statement, “As a Bundled Payments for Care Improvement (BPCI) Model 2 convenor of 125 hospitals across the nation, Premier is extremely pleased to see positive progress both in terms of savings and patient-reported outcomes. We are also pleased that results affirm no discernable differences in performance between hospital episode initiators and physician group practice initiators.

“As CMS scales this program further, we believe this proves that hospitals should be on equal footing, without one provider group being given precedence over the other.  The results indicate that, with only two years of experience, the bundled payment model holds promise to deliver higher quality, more cost effective care.  We believe that CMS should continue to advance voluntary, rather than mandatory, options for further bundled payment episodes,” Hiller said.

The report, which was prepared by The Lewin Group, also looked at the use of health information technology by participants in the bundled payment program models. The report found that Model 2 providers in the survey have high rates of electronic health record (EHR) use. Of the 101 providers in Model 2, 100 reported using an EHR system. Most of these providers also supported Meaningful Use measures, the report found, with 99 percent reporting use of computerized physician order entry, 97 percent using discharge instructions and care summar documents functionality, 95 percent reported use of medication management tools and 90 percent reported use of clinical decision support tools.

According to the report, 93 percent of Model 2 providers in the survey reported having health information exchange capabilities.

The BPCI initiative is comprised of four broadly defined models of care, which link payments for the multiple services beneficiaries receive during an episode of care. Under the initiative, organizations enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality and more coordinated care at a lower cost to Medicare.

In Model 1, the episode of care is defined as the inpatient stay in the acute care hospital. Medicare pays the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare continues to pay physicians separately for their services under the Medicare Physician Fee Schedule.

In Models 2 and 3, CMS pays providers a retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care. In Model 4, CMS makes a single, prospectively determined bundled payment to the hospital that encompasses all services furnished by the hospital, physicians, and other practitioners during the episode of care, which lasts the entire inpatient stay.

In July, CMS proposed mandatory bundled payment models for care for heart attacks and for cardiac bypass surgery. The proposal follows the implementation of the Comprehensive Care for Joint Replacement Model that begin earlier this year, which introduced bundled payments for certain hip and knee replacements.

According to CMS’ evaluation report, Model 2 was the most widely adopted model, accounting for approximately three-quarter of episodes and half of provider participants. The majority of episode initiators were acute care hospitals, which tended to be larger, urban and likelier to have teaching programs than non-participating hospitals, according to the evaluation report.

Public and private-sector bundled payment models have already shown promise in improving patient outcomes while lowering costs, including for cardiac and orthopedic care, Conway noted that future evaluation reports will have greater ability to detect changes in payment and quality due to larger sample sizes and the recent growth in participation of the initiative.

Conway also noted the Obama Administration’s goal to have 50 percent of traditional Medicare payments tied to alternative payment models by 2018. “The 2016 goal of tying 30 percent of Medicare payments to alternative payment models was met eleven months ahead of schedule, and we are committed to keeping that momentum,” he wrote.

“Patients want the peace of mind that comes with knowing they will receive high quality, coordinated care from the minute they are admitted to the hospital through their recovery. Bundling payments for services that patients receive across a single episode of care – such as a heart bypass surgery or hip replacement – encourages better care coordination among hospitals, doctors, and other health care providers. Providers participating in bundled payments must work together when patients are in the hospital as well as after they are discharged, which should improve their recovery and avoid preventable complications and costs by keeping people healthy and at home,” Conway wrote.

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