Bundled payments attract providers, but will they sign?
The growing number of healthcare providers considering joining Medicare’s bundled-payments program signals widespread thirst to explore risk-based reimbursement models, but the success of the initiative will depend on how many actually take the leap.
About 4,100 new applicants are eligible to join 2,400 hospitals, nursing homes and medical groups that are already candidates for Medicare’s Bundled Payment for Care Improvement initiative, the CMS Innovation Center said last week. At this stage, providers will merely evaluate their performance under the possible bundled payments to see whether they can stomach the risk.
Not all of the candidates will agree to actually enter into bundled-payment contracts. In the very first crop, 86 did not and 236 went ahead. A large percentage backing out should raise questions about what prompted the exit, said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute.
The next wave of candidates was supposed to decide before year-end. The CMS, however, notified them last week that the agency is delaying the release of Medicare pricing data that’s needed to assess bundled-payment options, said Brian Fuller, director of post-acute care for consulting firm Avalere Health. As a result, candidates will have up to four additional months to decide whether to join the program. They can enter into contracts in January as scheduled but can wait until April 2015, and they can expand contracts through October 2015.
“The strength of the case-management team is essential to implementing this effectively,” said Rich Roth, vice president of strategic innovation at San Francisco-based Dignity Health, which is seeking to expand its participation from two hospitals to nearly all its 37 hospitals.
De Brantes said the surge in interest suggests growing comfort among providers with reimbursement that comes with heightened financial risk. The Medicare initiative’s four models give providers the opportunity to test bundled payments on a limited scale, unlike contracts that require a more global budget.
The initiative, launched in January 2013, bundles payments for multiple services connected to some or all of 48 episodes of care. Participating providers profit when their spending on that care falls below Medicare’s savings target. With some exceptions, they must beat Medicare costs by 2% to 3.5% before they’re rewarded.