Bundled Payment Policy

by Jonathan W. Pearce, CPA, FHFMA

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:

I was quoted in an article entitled "Bundled Payments: What Doctors Need to Now" in the April 2017 issue of Medical Economics, which offers some guidelines to physicians about participation in these programs. This article expands on some points made there, and provide some additional considerations for physicians who may wish to participate in these programs.

Many of us in the bundled payment world had barely overcome our surprise at the presidential election results when we heard of the selection of Dr. Tom Price as HHS Secretary. As a component of the much-larger Affordable Care Act, we had hoped that the bundled payment programs would be “under the radar” and might not receive significant attention, at least until later in the administration. But Dr.

CMS has made the option available to BPCI participants to have their targets for the Major Joint Replacement of the Lower Extremity episodes stratified by whether the patient had a hip fracture. This issue is of concern to some BPCI participants because episodes involving fractures are considerably more costly than non-fracture episodes. While non-fracture episodes may cost $20-22,000, fracture episodes are typically 45-50% higher at $35-40,000.

Jonathan Pearce, CPA, FHFMA and Coleen Kivlahan, MD, MSPH

The Medicare Bundled Payment for Care Improvement (BPCI) program allows participants to assume financial risk for all Medicare services occurring within 30 to 90 day period after hospital discharge. Model 2 participants give up 2% of the episode target amount as a discount to CMS in 90-day episodes, but are allowed to retain any savings from Medicare cost reductions below the target amounts.