Health Policy$ense

Penn DC Forum Envisions the Future of Bundled Payments

Navathe and Emanuel host event on payment transformation

Just as Medicare launched its new voluntary bundled payment program, LDI Senior Fellows Amol Navathe, MD, PhD, and Ezekiel Emanuel, MD, PhD, hosted a forum in Washington, DC to discuss current evidence and best practices around payment transformation. The forum, Moving Forward with Bundled Payments, brought policymakers, policy advocates, researchers, health insurers, and health system leaders together to learn from each other’s experiences in implementing new payment models.

(l) Amol Navathe, MD, PhD, is Co-Director of the Health Care Transformation Institute and Associate Director of Center for Health Incentives and Behavioral Economics at Penn.
(r) Ezekiel Emanuel, MD, PhD is Vice Provost for Global Initiatives, Diane v.S. Levy and Robert M. Levy University Professor, and Chair of the Department of Medical Ethics and Health Policy at Penn.

The “mission of making sure that all Americans have access to affordable, quality health care through a high-performing health care system” is “what brings us here today,” stated Shawn Bishop, MPP, Vice President of The Commonwealth Fund, which sponsored the forum.

Dr. Navathe reviewed the current state of evidence on bundled payments, gleaned from voluntary and mandatory Medicare programs in the past five years. “There are, at this point, hundreds of hospitals, thousands of providers, and millions of patients who have already been touched by bundled payments already,” he said. Studies show that bundled payments for surgical procedures can generate savings without adversely affecting patient outcomes, but less is known about the effect of bundled payments for acute or chronic medical conditions.

Much of the evidence emerged from Medicare’s Bundled Payments for Care Improvement (BPCI) program, launched in 2013. The new program, BPCI Advanced, builds off the lessons learned from the earlier program, according to Christina Ritter, PhD, Director of the Patient Care Models Group at the Center for Medicare and Medicaid Innovation (CMMI). She explained that “there’s no way that folks can continue to achieve significant savings off of a historical target, time and time and time again,” as earlier models of bundled payment had expected. To make BPCI Advanced more sustainable, she said, CMMI now uses a “risk-adjusted, moderately prospective payment amount.” In addition, BPCI Advanced has added outpatient episodes and eliminated episodes from BPCI that had lacked substantial participation.

Although Medicare’s bundled payment initiatives have drawn most of the attention, private health insurers are also using them, and shared their experiences implementing them with providers. Lili Brillstein, MPH, Director of Horizon Blue Cross Blue Shield of New Jersey’s Episodes of Care for the Market Innovations team, described how they support providers moving into bundled payments: “We get them together individually and talk with them to figure out where is the variation in care and cost of care among like patients who have like outcomes, and we get them together as groups.” She said that aligning with other public and private insurers is critical, despite differences in how their models are structured. She also noted that bundled payments do not necessarily “address whether the patient needed the procedure in the first place.”

The Hawaii Medical Service Association (HMSA), the largest private insurer in the state, gives a global capitated payment to its primary care physicians, whose per-member-per-month payment varies by risk, quality, and total cost of care. Mark Mugiishi, MD, FACS, Executive Vice President and Chief Medical Officer of HMSA, described the program, and pointed to the principles of “being fair, transparent, and simple” as integral to success with providers. Emily Oshima Lee, MA, Assistant Vice President of Health Strategy at HMSA, added that providers need to have the “right data at their fingertips” to be able to identify an episode, the patients included, and opportunities to improve quality and reduce costs. Echoing Ms. Brillstein’s remarks, she said, “Alignment with federal models has been a really positive thing. It allowed us to [add] a lot of momentum and credibility to the work going into this with our specialists.”

Health system leaders shared their perspectives on what hospitals and health systems need to succeed in bundled payment models. Jay Bhatt, DO, FACP, Senior Vice President and Chief Medical Officer of the American Hospital Association, urged all stakeholders to work together to improve the information provided, develop actionable reports, and aggregate data at patient-specific levels. He emphasized the need for payers “to routinely provide timely—if not real-time—data in a readily usable format to the hospitals participating in bundled payment models.”

Kevin Bozic, MD, MBA, Chair of Surgery and Perioperative Care at the University of Texas at Austin, described how the payment model drives delivery system transformation. Under bundled payment, he said, his team was able to eliminate a lot of “inefficient and unnecessary care, primarily in the post-acute care space.” While he acknowledged “an opportunity to redesign care moving upstream from procedures [to how we] manage chronic conditions,” he also expressed concern, as Ms. Brillstein did, about “the question of appropriateness.”

Joshua Liao, MD, MSc, an LDI Adjunct Senior Fellow and Associate Medical Director of Contracting and Value-Based Care at the University of Washington, discussed ways to align practice transformation for bundled payments with other value-based payment programs. He underscored the need to understand interactions between different programs in contracting strategies, and echoed earlier remarks on the importance of physician engagement and feedback. Alignment across value-based payment strategies will likely reveal opportunities for both redundancies and synergies, as practices may also have governance structures in place for clinical transformation, electronic health records, and quality improvement and patient safety initiatives.

The potential for more integration between bundled payments and other payment models like accountable care organizations (ACOs) was a recurring theme throughout the forum. Ms. Bishop commented that it will be crucial to understand the interactions between different models—for example, the possible effects on savings from bundled payments for ACOs. While Dr. Bhatt emphasized the need for integration within payer models, Dr. Liao also noted the potential for good and bad interactive effects between them. Dr. Ritter acknowledged that “sometimes we’ve set them up to compete, and I think that that’s not necessarily productive—I think we find many of our participants that are bigger systems and work with both do very well by those.”

In closing, Dr. Emanuel highlighted two major lessons from ongoing work on bundled payments—that they are an improvement upon the previous system, and that they are “a great example of learning organizations [in which] everyone is committed to learning as we go.” He also noted the inevitability of alternative payment models and the need to expand bundled payments, in terms of more episodes, as well as the types, duration, structure, and standardization of bundled payments. “We are now well ahead of the rest of the world on innovation,” he said, “and I do believe that we will teach the world how to reorganize care, and it’s inevitable, in my opinion, that bundles are going be a key element.”

Dr. Navathe concluded the forum by looking ahead to the more immediate future of bundled payments: “No payment model is perfect, but what BPCI Advanced can serve as, is a catalyst—as a catalyst for other insurers to create alignment, as a catalyst for clinician leaders, like the ones we had here on our panel, to drive the right type of system transformation and clinical practice transformation within their systems ultimately to benefit patients.”

A video recording of the forum can be viewed here.

Claire Dinh is a Senior Research Coordinator in the Department of Medical Ethics and Health Policy, and a Master of Bioethics student at Penn.