How Your New Contract Physician Group Killed Your Bundled Payment Program

After several months of negotiations you've reached agreement with a contract physician group to provide hospitalist services in your hospital. This group has particular expertise in helping patients with multiple comorbidities and focuses on making sure that those patients get into the proper post-acute setting, which you hope will improve your performance in the Medicare Bundled Payment for Care Improvement (BPCI) CHF and COPD episodes in which you’re participating.

Or maybe you've contracted with a major orthopedics group for hip and knee replacements, with expertise in fracture care, and you're hoping that their expertise will improve your performance in your Major Joint Replacement BPCI episodes. Or you’re in one of the targeted metropolitan statistical areas (MSAs) for the proposed mandatory Medicare Continuing Care for Joint Replacement (CJR) program and are counting on these orthopedists to improve your performance in comparison to the regional targets.

Imagine your surprise in finding the number of those episodes dropping to near zero on your monthly analytics reports after those groups start practicing in your hospital. Your only remaining BPCI episodes are those handled by the community physicians who also have privileges in your hospital, but those guys aren't the new rock stars - they're the ones who have been dragging down your performance all along. Now they're all you have left.

What happened, you wonder. Where did all of those episodes go? Did the new doctors somehow steal them?

How Physicians Trump Hospitals in Bundled Payment

Yup, that's exactly what happened. The BPCI rules give preference to a physician group who's participating in BPCI in episodes in which the hospital is also participating. Many large physician groups realized this and signed up for BPCI, either individually or as part of a larger "convened" group in which risks and rewards are shared. Those physicians will preempt a hospital for any episodes in which they're the primary physician. The only exception is if the hospital was participating in an earlier "wave" of BPCI than the physicians were. If you participated BPCI before the physicians did, you'll probably own the episode. But if you were in the same or a later group, they'll own it.

These effects can be far-reaching with hospitalists since they treat patients in many different episode families. A hospitalist group can hijack almost all of the medical DRGs in which a hospital is participating, leaving only patients managed by non-contracted physicians in the episodes. Not only may these remaining physicians not be as engaged in care management processes as those with higher patient volumes, but the significant reduction in episode volume can significantly increase the random variation in episode costs. This situation has caused several hospitals to discontinue participation in episodes in which their hospitalists participate. Other negative effects are described in this article.

What about CJR?

This issue can be more pervasive in the proposed mandatory Medicare Continuing Care for Joint Replacement (CCR) program for two reasons. First, BPCI episodes preempt CJR episodes. Physicians participating in the Major Joint Replacement BPCI episode will always own those episodes in a CJR-participating hospital. In addition, the CJR program is mandatory. Hospitals can't simply drop out of CJR if an orthopedist group participating in BPCI assumes most of the patients that would otherwise be CJR episodes. The hospital will struggle along with few if any remaining joint replacement episodes.

Which Physician Groups are In BPCI?

This is a difficult question since physician groups aren't definitively distinguished on the participating providers list. However, three major “conveners” have a large number of participants with names that appear to be physicians, and those groups have 96 physician groups participating in the Major Joint Replacement episode alone. A complete list of BPCI participants is here  – you can open and search this file for a physician group with whom you’re considering affiliating.

So What Should You Do?

Forewarned is forearmed. If you’re part of the BPCI program, or are in the selected MSAs for the CJR program, you need to know if any of your physicians are participating in BPCI. If you’re in BPCI you probably already know of any existing physician participation, but if you’re in a CJR MSA and don’t employ your orthopedists you need to find out if they’re BPCI participants. If so, it’s time for some serious negotiations because in most cases their presence will negatively affect your results. Perhaps a gainsharing arrangement will satisfy their appetite for risk-sharing. In extreme cases renegotiation of the contract may be appropriate.

And any future contracts with outside physician groups should stipulate that they cannot participate in any payment system that would overlap any current or future payment system in which your participation is required. Expansion of mandatory Medicare bundled payment into additional clinical areas is expected, and a hospitalist group that participates in BPCI bundles could seriously interfere with the hospital’s performance in a future mandatory bundle.