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The ever-stronger case for bundled payments

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Though it is still too early to tell where the Capitol Hill debates on the Affordable Care Act repeal and replace plan will lead us, one thing is certain: the future of our healthcare system depends on Americans being able to rely on cost-effective, high-quality care when and where they need it. No matter what else happens, we need value-based systems that are demonstrably both clinically and financially effective.

As a value-based system specifically designed to make the healthcare system accountable to patients, bundled payments belong at the forefront of the healthcare reform conversation. Still, as far as value-based care models go, bundled payments are far less understood and frequently overlooked. This is why wholehearted support for continued testing of the models is crucial.

{mosads}When first introduced, bundled payments faced varied levels of apprehension. There were concerns that bundles could cut revenues, add administrative headaches and impose limits on care that could affect patient outcomes. Some cautious skeptics worried that providers, faced with risking financial losses, may seek to maximize profits at a danger to patients. Still others saw bundled payments as only a steppingstone to population health, rather than a long-term solution for better, more coordinated care for individuals.

Early results from the first large-scale testing initiative for bundled payments, Bundled Payments for Care Improvement (BPCI) Initiative, have been promising, quelling many of these concerns. naviHealth’s experience tells us bundled payments have proven effective in connecting providers and furnishing patients with high quality care. The models encourage hospitals, doctors and other healthcare providers to take a longitudinal and quality-focused approach to patient care. Providers are fuelled by incentives to collaborate. Waste is discouraged. Redundancies are eliminated. Infections and complications that could cause readmissions are prevented. Care is targeted, patient-centered, and of higher quality.

Such higher quality care translates to not only improved patient engagement and satisfaction, but improved outcomes are also economically beneficial, delivering savings and lowering costs. In many respects, bundled payments are an important complement to accountable care organizations and other value-based care initiatives that promote coordinated care.

Bundled payments have demonstrated particular success in reining in one of the more complex and costly aspects of patient care – the post-acute care phase. Due to the wide variability in quality and cost of care, policy makers have pointed to post-acute care as the sector most ripe for improvements. So it should be no surprise that the $10 billion BPCI Initiative has over 360 organizations and 1,755 providers nationwide as participants. In the first half of 2016 alone, Medicare spent $1.1 billion on care under bundled payment models. The resulting clinical improvements led to $72 million in overall savings.

As one of the first conveners of BPCI, naviHealth worked with the Department of Health and Human Services to help hospitals adopt bundled payment models, address challenges and opportunities and streamline care transitions. Today, we annually oversee more than 50,000 patient episodes in more than 50 hospitals across eight states around the country. The episodes range from joint replacements, congestive heart failure and stroke to COPD, pneumonia and sepsis. In our experience, bundled payment models work in a range of markets and clinical conditions, resulting in lower costs of care, but also lower readmission rates, reduced complications and shorter lengths of stay.

Our hospital partners have generated over eight percent aggregate gross savings across a BPCI portfolio that includes 40 out of 48 unique episode groups.  On average, that’s over $2,200 in gross savings per patient episode. Simultaneously, we have reduced the number of days patients stay in skilled nursing facilities by more than 15 percent and have a net reduction in readmissions across our portfolios of episodes under management.  We also help identify patients that are clinically appropriate to recover in the comfort of their own home, resulting in an 11 percent increase in the rate that patients are discharged from a hospital to their own home.  Bundled payments are reducing readmissions and getting patients home faster.

recent study in JAMA Internal Medicine, “Cost of Joint Replacement Using Bundled Payment Models,” concluded that bundled payments for joint replacements achieved “substantial hospital savings and reduced Medicare payments,” while also driving down emergency room visits and readmissions. Those findings are consistent with our own.

The next generation of BPCI, expected to go live in 2018, will further advance value-based care. While there is never a quick fix or single solution, the mounting evidence is conclusive: bundled payments promise to alleviate challenges and provide solutions to hurdles the healthcare system faces every day. To achieve their full potential, bundled payments must be preserved and, indeed, expanded. 

Clay Richards is president and CEO of naviHealth, a company that provides data on patient outcomes and cost to health plans and providers.

The views expressed by this author are their own and are not the views of The Hill.


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