Bundled Payment Pilot

Medicare Bundled Payment Q&A with CMS

Throughout the BPCI application process, Singletrack Analytics and our partners at DataGen have maintained an ongoing dialogue with CMS about issues related to the bundled payment implementation process.  Below are some of the issues discussed along with our interpretation of the response.

Price Determination

Assessing Participation Risk in the Medicare Bundled Payment Initiative

For most organizations contemplating participation in bundled payment programs such as the Medicare Bundled Payment for Care Improvement (BPCI) initiative, a critical factor in the participation decision is a quantification of the risk that they will assume are participating in a particular DRG or other clinical condition. This risk is the result of inherent randomness in the episode costs among different episodes.

Bundled Payment Analytics - Adjusting Pricing for Low Volume DRGs

Considerable discussion has taken place about the process to be used to compute episode payment rates for low-volume DRGs. This is necessary because applicants are required to participate for all DRGs within a selected episode definition, even though the applicant may have extremely low volumes of those DRGs. These low volumes would cause the historical cost computation to be inaccurate because of the small sample size, and may create an appropriate advantages or disadvantages for the provider if the historical costs were extremely high or low.

Bundled Payment Analytics - Understanding Risks of the New DRG Requirements

One significant major change made by CMS was to require additional DRGs in an "episode family" to be included in the applicant’s proposal. Under the initial application rules, only DRGs that were related through presence or absence of complications were required to be included in an application. For example, to include DRG 194 (Simple pneumonia pleurisy with CC), applicants were also required to include DRGs 193 (with MCC) and DRG 195 (without CC/MCC).

Bundled Payment Analytics - the Effect of Outliers on Payment and Incentives

One of the changes implemented by CMS in this round of the bundled payment application project is the introduction of outlier limits on episode costs. These limits are computed on a DRG basis, supposedly from the HRCs provided to each applicant, and are established at the 5th and 95th percentiles of the episode costs. This means that on average 5% of the cases in each episode will fall above and below these limits respectively. Because of Pareto's law, however, each of these limits will generally not affect 5% of the cost.

AHA White Paper on Bundled Payment Released

The American Hospital Association recently released its white paper analyzing the Medicare bundled payment initiative, as well as other bundled payment issues.

CMS Bundled Payment Changes offer New Opportunities

Like many others, we've been carefully listening to the CMS webcasts describing the next steps in the Bundled Payment for Care Improvement (BPCI) program. Some of the changes are straightforward and had been expected, such as the need to converge to more consistent models that eliminate some of the initial flexibility that was allowable during the application stage. Other changes, such as the details of implementation of the Empirical Bayes techniques that will apparently be used in some cases to compute episode payments remain to be clarified, and we are reserving judgment on them.

Policy Implications in Managing Risk under Bundled Payment

Under episode-based bundled payment systems, a provider contacting organization is paid a fixed amount for all care required by patients who meet the definition of the episode.  Since no definition of episodes results in a totally homogeneous group of patients, cost of individual patients vary, and therefore the contacting organization is subject to random variations in its average per-patient cost depending on which patients are included in its episodes. As bundled payment models evolve, two different methods of managing these types of variations appear to have emerged.

BPCI May Be the Best Bundled Payment Deal You'll See for a Long Time

OK, it’s a little late to be saying this, but there may be some providers who are on the fence about participating in the Medicare bundled payment initiative and need a little push.  Many providers have looked at the data and decided that bundled payments aren’t right for them at the moment.  Others may be still considering the alternatives.  Here’s one more factor to consider – the Bundled Payment for Care Improvement initiative may be the best deal you’ll see for a long time – perhaps ever.

Hedging Readmission Risk in Bundled Payment

Readmission DRGs fall into two groups.  The first group is the DRGs for readmissions that occur several times throughout the year, and appear consistently across years.  These readmission DRGs appear to be good candidates for clinical interventions.  The second group is the “singleton” DRGs that occur only once during a year for a specified index DRG.  These DRGs have little consistency across years, appear to have minimal potential for clinical intervention, and behave somewhat randomly.

Syndicate content