For hospitals and physician group practices (PGPs) comfortable enough to adopt a “wait and see strategy” towards bundled payments, consider the early results of two awardee conveners in the Centers for Medicare and Medicaid Innovation’s (CMMI), Model 2, Bundle Payments for Care Improvement (BPCI) Initiative.
Under this model, the episode of care includes the hospital inpatient stay and all related services during the episode up to 90 days post hospital discharge. Awardee conveners assume financial responsibility for the bundle (agree with provider to share in downside risk and participate in the upside potential).
Serving as a BPCI Model 2, Physician Group Practice (PGP) awardee convener, Signature Medical Group, St. Louis, MO, has organized the largest clinically integrated orthopedic program with a network of 2,000 physicians in 58 practices across 26 states managing 50,000 lower extremity joint replacements (LEJR) per year. Through implementing clinical care redesign and care management processes across the continuum of care early successes compared to historical reference values include reductions in: readmission rates by 12-50%, SNF utilization by 10-50%, and acute care rehabilitation by up to 30%; while achieving average patient satisfaction scores in excess of 97%.
Through its bundled payment platform, Remedy Partners, Darien, CT currently manages in excess of $5 billion of Medicare spend in the four (4) BPCI Models. A large percentage of that total is in LEJR. Remedy provides a shared service model of administrative services for over 1,200 hospital and PGP partners for a minimal, low single-digit, percentage. Remedy has raised over $100 million in the capital markets, most recently a $50 million Series B funding in July by Bain Capital Ventures.
In November 2014, CMS capped the previously unlimited upside payments and downside losses at plus/minus 20% of the performance period benchmark amount (trended baseline price times the number of episodes of care, aggregated to the awardee convener level). CMS explained that while many participants experienced positive utilization management results, those results were offset by their financial reconciliation. CMS’ collaborative approach to work with providers who volunteered to participate in BPCI is commendable; but the upside cap might also suggest that some awardee conveners were successful beyond CMS’ expectations.
SMG and Remedy’s BPCI successes, combined with the momentum for bundled payments in commercial markets (one example, Centers of Excellence), have established the traction for this alternative payment model. Providers hesitating to move forward with a bundled payment initiative for joint replacements face real possibility of losing market share to competitors who already have, or will soon implement a bundled payment program. While you may not be on the leading edge, one would be better served to get on the bleeding edge than end up with 0% market share!
Originally posted by Richard S. Morgan on LinkedIn Pulse