With the latest presidential election in our rear view mirror, its time to turn our attention to the road ahead. With a Republic-led Congress, and a Republican president-elect, we know change is coming to healthcare; we simply do not know what it will look like.
What will become of the Affordable Care Act (ACA) and resulting value-based care initiatives? In recent months, leading Republicans have vowed to repeal the ACA. If successful, the cost and impact on the private-sector and the nearly 20 million insured through Obamacare would be staggering.
While every aspect of the ACA is sure to be scrutinized, and many pieces may head to the chopping blocks, there's one aspect we cannot afford to lose: bundled payments. With the rising cost of government healthcare spending and an aging population, the transition to move from volume to value should remain a priority for both parties for the foreseeable future. Bundled payments are one solution that will continue to aid in this transition.
The theory behind bundled payments is that they focus care coordination responsibilities and opportunities on the best provider to treat targeted patient populations when those patients most need their expertise. When structured appropriately, these programs reduce costs, improve quality, and enable providers to access significant new revenue sources.
Though it is clear Republicans and Democrats haven't seen eye-to-eye on the ACA, they have made progress together to foster the transition from volume to value with support of new payment models, including bundled payments. In 2015, the Medicare Access & CHIP Reauthorization Act (MACRA) was established to accelerate efforts to reimburse Medicare clinicians based on quality, instead of volume. The law, which encourages collaborations between plans and physicians to enter into new payment and delivery models, passed with an overwhelmingly bipartisan Congressional majority.
Further, The Bipartisan Policy Center also published a report last year by former Senate Majority Leader Tom Daschle, a Democrat, and former House Speaker Newt Gingrich, a Republican recommending that states adopt new innovative approaches to health insurance by taking advantage of components of the ACA, such as new payment models.
In the past few years, Medicare has doubled down on bundled payment with programs including, Bundled Payment for Care Improvement (BCPI), Oncology Care Model (OCM), Comprehensive Care for Joint Replacement (CJR) and Episode Payment Model (EPM). The fast adoption of these new models is largely due to the promise bundled payments show in reducing costs, while maintaining high-quality care. In fact, in the first 21 months of the BPCI initiative, an independent study conducted by The Lewin Group concluded the program was associated with a greater reduction in Medicare per-episode payments, with no decline in care quality, when compared to providers not participating in BPCI. At Archway Health we have seen even better results by combining the bundled payment model with advanced data analytics, focused care management, and heightened engagement with specialty physicians like orthopedic surgeons, oncologists, and cardiologists.
In addition to Medicare programs, the ACA also pushed insurers, physicians, hospitals and employers to launch their own reimbursement reforms, and they too are likely to continue. Commercial bundled payments have grown significantly over the past few years with the likes of GE, Lowe's, Walmart, and Boeing, to name a few, realizing the benefits to both employers and employees. As an example, GE has contracted with multiple national and regional "centers of excellence" for joint replacement and asks that their employees to receive care at these designated centers at significantly reduced out-of-pocket costs for the patient. With bundled payments, the arrangement makes sense because the employer can control the overall cost of care through a single bundled price, incentivize a quality outcome, reduce costs for the patient, and help their employees get back to work sooner. In addition to joint care, commercial bundled have been used for maternity and cancer care, and there are now programs emerging in many other specialties including cardiac care, urology, GI, and general surgery.
While all these bundled payment models and agreements stem from the implementation for the ACA, the concept is much older. Bundled payments began as early as the 1980s and have long showed potential as a solution to reduce costs and increase quality. In 1984, the Texas Heart Institute implemented bundled payments for cardiovascular surgeries, and as a result lowered their cost of services to $13,800 compared the average Medicare payment at the time of $24,588, while maintaining a high-quality of care. In the 1990s, Medicare even tested bundled payments with the Medicare Participating Heart Bypass Center Demonstration, and their findings showed that bundled agreements can successfully incentivize physicians and hospitals to work together to provide services efficiently, improve quality, and reduce costs.
More recently, in 2007, Geisinger Health System tested a "ProvenCare" model for coronary artery bypass surgery that was packaged at a fixed price and led to a significantly shorter length of stay, greater likelihood to be discharged directly home, lower readmission rates, and reduced costs compared to patients who received traditional care.
Time and time again, bundled payments have shown to consistently lower costs and lead to more coordinated, quality care. With the benefits to both patients, providers, employers and insurers, bundled payments will likely only increase as a strategic move. The future of healthcare policy may not be known, but we're certain bundled payments are here to stay.
Dave Terry is a leader and innovator on bundled care and healthcare reform, and has led initiatives to improve healthcare for providers, payors, and patients. He is currently co-founder and CEO of Archway Health, a bundled payment advisory and technology firm.
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