The use of bundled payments was one of the predictions that healthcare industry observers had argued would take place in the future. There was even some bundled payment language in the Affordable Care Act (ACA). The Centers for Medicare and Medicaid Services (CMS) also mandated the use of bundled payments for specific medical conditions. Now years later, these predictions are starting to come true. Insurance providers like both Humana and United Healthcare are expanding their bundled payments program.
A Brief Summary of Bundled Payments:
The stated goal of the bundled payment program was to control healthcare cost while also creating better outcomes. These episode-based payments have the stated goal of reducing spending while maintaining or exceeding quality standards. Inversely, health systems that exceed the total cost of the target price for a given medical procedure, are required to repay Medicare. In these scenarios, the Centers for Medicare & Medicaid Services (CMS) are employing a carrot and stick strategy.
Traditionally, Medicare made separate payments to healthcare providers for each individual healthcare service. This is for services delivered to beneficiaries for a single illness or course of treatment. However, this traditional approach could create fragmented care with minimal coordination between the various providers and health care settings.
The reimbursement for delivered medical services rewards the quantity of services offered by medical providers (doctors). The philosophy behind bundled payments is to instead focus on the quality of care furnished (patient outcome).
The CMS advocates that research demonstrates that bundled payments can align incentives for providers such as hospitals, post-acute care providers, physicians as well as other healthcare practitioners. This bundled approach to services allows them to work closely together across all medical specialties and healthcare settings.
The CMS, when they introduced their new voluntary bundled payment model called Bundled Payments for Care Improvement Advanced (BPCI Advanced), describes bundled payments as the next step in medical innovation. They argue that the use of bundled payments generates incentives for both insurance providers and medical practitioners to work together. In this way, these two groups and better coordinate care and engage in continuous improvement that controls expenses.
However, some healthcare organizations are concerned that these new bundled payment models are too overwhelming for physicians. Yet, bundled payments are growing in the U.S. healthcare system.
Humana’s Value-Based Program:
Recently, the insurance company Humana has expanded a bundled payment program for its Medicare Advantage members. Humana has a 17 percent share of the healthcare insurance market. In addition, Humana is among the largest Medicare Advantage insurers in the United States.
These value-based programs, along with the existing episode-of-care-based model, are part of Humana’s coverage for orthopedic and neurosurgery practices. Similar to language from the CMS, Humana is stating that both programs offer the opportunity for additional payments to physicians and clinicians. These additional payments are contingent on improved patient health outcomes and lower medical expenses.
Humana has arranged agreements with large orthopedic specialty groups who are now providing Humana’s total joint replacement episode-based payment model. The bundled payment models for spinal fusion surgeries and hip or knee joint replacements.
Humana’s program offers physicians and clinicians the opportunity for additional payment if there are improved health outcomes and cost controls across a member’s entire spinal surgery episode-of-care. Specifically, healthcare providers are measured by three clinical indication rates: readmissions, average risk-adjusted episodic cost-of-care, cervical complications and lumbar complications.
Humana states that their new payment model promises to better coordinate medical care, improve patient outcomes and control cost. At the time of publication, Humana’s model is offered at more than 75 medical practices in 21 states.
United Healthcare’s Bundled Payment Program:
In a similar fashion, UnitedHealth Groups has also expanded its use of bundled payments. Their bundled payment program will collaborate with physicians and health systems in more than 30 states in order to improve the quality of healthcare as well as lower overall medical expenses.
UnitedHealthcare (UHC) says that healthcare providers can use the insurer’s care management solutions and patient engagement tools, performance analytics and payment administration services in order to improve the quality of healthcare. UHC continues by stating that they will provide their partnering healthcare professionals with scalable services and support. This includes care management solutions to help patients receive a quality experience from pre-operative education to post-acute care.
Members for United Health Groups Medicare Advantage program now are part of a bundled payment models for specific procedures. The specific medical procedures that are included in the program are hip and knee replacements, spinal fusions and coronary bypass operations. These bundled payment procedures are in addition to the new bundled payment model (BPCI Advanced) that was introduced by the CMS.
UnitedHealthcare Care’s Bundles Program is an example of the insurance providers transition to a value-based care model. The insurance giant states that by 2020, they project $75 billion in medical reimbursements to be connected to some sort of value-based model.
Part of a Larger Payment Trend:
The shift from fee-for-service payment models to value-based care programs are part of a larger disruption in U.S. healthcare. There are new challenges face healthcare as well as new companies entering the healthcare market place.
These forces will continue to prompt payers to offer reimbursement models that emphasize accountability for both costs and the quality of care delivered. Bundled payments emphasize high-quality, coordinated health care at a lower cost by setting price and quality standards for procedures and follow-up treatments, and then rewarding participating care providers for exceeding these standards. But, this is a shift away from the more common fee-for-service model that pays for each piece of a treatment.
The percentage of U.S. healthcare payments tied to value-based care in 2017 was 34 percent. Since this is a new payment model, there is little long-term data to compare, but in 2015 on 23 percent of payment plans were tied to bundled payment model.
An increasing amount of healthcare providers are in favor of bundled payments. However, many others are nervous about adopting a new payment model. Due to this fact, the CMS bundled payments for care improvement advanced model is designed for medical providers who want and need time to work with this model and improve their delivery of healthcare. This means becoming more familiar with the new metrics that bundled payments models use to judge success and failure.
Who We Are:
Advanced Billing & Consulting Services is an Ohio-based company that provides experienced revenue cycle management services for a variety of medical specialties. They also provide workforce management tools for human service agencies, web design and accounts management services for Medicaid waiver providers/I-DD agencies. For additional questions about this topic or medical billing in general, please contact the staff at ABCS RCM.
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