Mandatory Bundled Payment Participation - Comments on Health Affairs Article

The Health Affairs Blog published an article on Aoril 10, 2017 entitled "How Should the Trump Administration Handle Medicare's New Bundled Payment Programs?". That article describes and compared several options regarding the participation of physicians in these programs, as well as the mandatory or voluntary nature of those programs. Our comments on that article are below:

The authors discuss a model in which physician participation would apparently be voluntary, but hospital participation would be mandatory. As described, this arrangement would be significantly problematic to many hospitals. Having a high episode volume, particularly in the EPM AMI cardiology episodes that involve significant inter-episode cost variations, is essential for several reasons. First, lower volume creates significant cost instability and also decreases the ability of the participant to measure the effectiveness of clinical initiatives. In addition as mentioned in the article, lower volume decreases the ability for the hospital to achieve savings commensurate with the cost of the care management activities required to participate in the program. Therefore, allowing physicians to voluntarily participate in these programs and preempt hospital episodes would lower the hospital’s patient volume, creating these issues.

Low Volume Issues

These problems manifested themselves in the BPCI program in which hospitals attempted to participate in the Major Joint Replacement (MJR) episodes. One participating hospital had implemented a variety of effective care management protocols and was achieving significant savings when they merged with another hospital and their orthopedics department was subsumed into a larger group that was participating in BPCI. That hospital lost about 95% of its MJR cases, with the few remaining cases being performed by lower-volume unengaged physicians. Consequently that hospital ended its participation in BPCI for those episodes. Had the hospital been in an mandatory bundle, though, it would have been forced to continue to participate in MJR episodes with inadequate remaining volume.

Therefore, in the case of a program in which hospital participation is mandatory, but physician participation is voluntary and physicians preempt the hospital in episode ownership, there must be some option for the hospital to withdraw from the otherwise-mandatory program. Perhaps a low-volume limit would be established based on a number of cases or a percentage of all cases retained by the hospital. If a participating physician group preempted episodes that left the hospital below those thresholds, the hospital would not be required to participate in the program with the remaining episodes. Absent such a process, many hospitals could be significantly disadvantaged by their physicians participating in these programs, and the downstream effects of these issues may not be desirable.

Convener Issues

The article also references “convener”-types of organizations that would assume financial risk for selected participants, but these organizations would not mitigate the problems described above.  Their function is to provide a “reinsurance” type of financial arrangement that shields providers (primarily physicians) from downside risk in exchange for a fee or other financial consideration. Organizations providing these functions will be a practical necessity for physicians who participate in the EPM cardiology bundles because of the lower volumes, higher inter-episode variation and lower opportunities to create savings in these episodes as compared to MJR episodes. The risks of participating in the EPM bundles would be prohibitive for all but the largest physician organizations. Therefore, policy-makers envisioning allowing physicians to participate in these episodes must also accept the inevitability of the addition of the “bundled payment convener” in the overall episode-based payment structure.

In addition, in the current BPCI program the convener, and not the healthcare organization, is the contract-holder with CMS. This essentially binds the participant to the convener, with CMS enforcing that arrangement. A participant who wishes to continue participation in BPCI without the convener, or with a different convener, faces a number of impediments that are created by CMS, such a discontinuity in the provision of claims data. Many participants believe that these arrangements are inappropriate – that the bundled payment arrangements should be between CMS and the participant, and not between CMS and a non-healthcare provider. Hopefully CMS will consider these issues in designing future bundled payment programs.