Catalyst for Payment Reform: Bundled Payment Programs Remain Challenging
On July 28, the leaders at the Berkeley, Calif.-based Catalyst for Payment Reform (CPR), which describes itself on its website as “an independent, nonprofit corporation on a mission to help employers and other health care purchasers get better value for their health care dollar,” announced the publication of a new report, “Bundled Payment Options in the 2020 Marketplace: A Guide for Employers and other Health Care Purchasers.”
As stated in a press release posted on its website landing page, the CPR leaders noted that “The cost of health care in America has long been unsustainable and the economic downturn stemming from COVID-19 makes it even more critical for employers and other purchasers of health care to improve the quality and affordability of care for their employees and their families. One under-utilized approach is bundled payment. The non-profit Catalyst for Payment Reform (CPR) has developed a suite of resources to guide purchasers, including a report entitled ‘Bundled Payment Options in the 2020 Marketplace: A Guide for Employers and Other Health Care Purchasers’ released today.”
The press release notes that “Bundled payment programs give health care providers a single target budget or price for an ‘episode’ of care, defined by the Centers for Medicare and Medicaid Services as ‘a set of services provided to treat a clinical condition or procedure, such as a heart bypass surgery or a hip replacement.’ The goals of bundled payment are to improve care coordination, quality and efficiency.”
Tuesday’s press release quoted Suzanne Delbanco, Ph.D., Catalyst for Payment Reform’s executive director, who said, referencing the just-released report, that “Reforming health care in the United States means creating the right incentives when we pay physicians and hospitals. After pushing for payment reform for 10 years, approximately 60 percent of payments to health care providers are ‘value-oriented’ – aiming to improve the quality and affordability of care. But bundled payment has been slow to gain traction and we think it deserves more experimentation, as do many of CPR’s members. On their behalf we evaluated the health plans and other vendors offering bundled payment programs and found myriad ways purchasers can bring bundled payment to their populations.”
The vast bulk of the report is focused on helping employer-purchaser executives to consider the ins and outs of the bundled-payment proposition, and notes that bundled-payment contracts “[h]old… providers financially accountable to a cost target for the episode of care, and… [encourage] care coordination and efficiency through a single payment that encompasses all physician and facility services.”
The report also notes some of the shifts in trends that have taken place in recent years. “Catalyst for Payment Reform (CPR) was founded on the principle that we must change how e pay health care providers, holding the health care delivery system accountable for health care outcomes, patient experience and efficiency,” the report notes. “Over the past ten years, we’ve seen a seismic shift in the growth of alternative payment models. When CPR began tracking payment reform among commercial health plans in 2010, only 1-3 percent of their health care spend was attached to a payment model that rewarded quality. The good news is that, by 2017, more than 50 percent of health plan payments to doctors and hospitals in the commercial sector were value-oriented; but episode bundled payment had not gained momentum, accounting for only 2 percent of commercial health plan dollars.”
Meanwhile, the report goes on, “Recently, through the Center for Medicare and Medicaid Innovation’s Bundled Payments for Care Improvement (BPCI) initiative, there is renewed focus on bundled payment as an alternative payment model. Several factors recently led CPR to want to support purchasers in advancing bundled payment and implementing their own bundled payment strategy, including:
• Promising evidence for effective bundled payment arrangements showing higher quality care at the same or lower cost;
• Health plans were making so little progress with bringing bundled payment to scale;
• A crop of new vendors entering the marketplace offering bundled payment programs;
• More purchasers have an increased appetite to implement a direct or semi-direct contracting arrangement with a health care provider.
In that regard, the report notes of CPR leaders, that “We brought a group of sophisticated purchasers (including 32BJ Health Fund, Qualcomm Incorporated, San Francisco Health Service System and Self-Insured Schools of California) together in a small group collaborative to discuss how purchasers could advance effective bundled payment in the marketplace. During the collaborative, we heard from various stakeholders and developed questions and criteria by which to evaluate programs offered by health plans and other vendors. The goals were to signal the interest among purchasers, communicate what purchasers want from these programs, and to help purchasers understand the various options in the market that would enable them to bring bundled payment to their populations.” In that regard, CPR’s leaders have created “a hands-on toolkit with standard evaluation questions and specifications that purchasers can use to assess health plans and vendors offering bundled care comes more revenue. However, these published studies do suggest more bundled payment would be beneficial, though additional experimentation and research will be important over time.”
The report concludes with this analysis: “After nearly a decade of slow, incremental progress, bundled payment programs are now rapidly gaining traction and notoriety. Purchasers searching for strategies to improve quality and affordability through a bundled payment program have many potential partners at their disposal. Purchasers can exert pressure on health plans to develop products anchored around providers in bundled payment contracts, or partner with an external bundled payment vendor. Moreover, given the expansion of procedures and conditions available for bundled pricing, purchasers have agency and choices around how to implement a program and bring it to scale. Purchasers can opt for narrow implementation with a single procedure and a specific provider or jump in with both feet and implement several episodes with multiple providers.”
Further, it notes that, “At the time of this report’s publication, the United States is still deep in the turmoil wrought by the COVID-19 pandemic. Consequently, in the short term, demand for elective procedures (and the supply of hospitals willing or able to provide them) may be low. That said, there are several advantages to launching a bundled payment program now. For example, introducing a change in benefit design for elective procedures while demand is low buys time for purchasers to roll out an implementation strategy with lower risk of member disruption. Also, offering benefit design change through a COE model is less likely to cause member abrasion if the alternative is to raise premiums or otherwise increase employees’ share of the cost.”
