Tag Archives: bundled payments

An Overview of the Bundled Payments for Care Improvement Advanced Model

In January, the Centers for Medicare and Medicaid Services announced a new voluntary bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI Advanced). This model starts on October 1, 2018, and creates a replacement for the current BPCI initiative. This paper by Milliman consultants Samuel Bennett and Pamela Pelizzari outlines the major provisions of the newly announced BPCI Advanced model.

Comprehensive Care for Joint Replacement Performance Year 1 results: Key considerations

The Comprehensive Care for Joint Replacement (CJR) model is a bundled payment model in which 799 participating hospitals from 67 metropolitan statistical areas are required to participate. The first CJR reconciliation for Payment Year 1 (PY1) was completed in spring 2017. This paper by Milliman’s Pamela Pelizzari, Jocelyn Lau, and Harsha Mirchandani combines data from the report of PY1 results and other publicly available sources to compare hospitals that received payments in CJR PY1 to those that did not.

Evaluating opportunity in the CMMI BPCI program: Comparison of PAC utilization to benchmarks

The opportunity to reduce Medicare claims cost in the Bundled Payment for Care Improvement Initiative (BPCI) of the Center for Medicare and Medicaid Innovation (CMMI) is typically in the post-acute care (PAC) period. Analyzing the opportunity to reduce Medicare PAC spending requires providers to adopt a payor state of mind—payor tools and approaches will be very helpful. Benchmarking to best practices is one of those tools.

Milliman has developed nationwide average and well-managed (WM) benchmarks for PAC periods of one to 30, 31 to 60, and 61 to 90 days. Milliman’s Bruce Pyenson, Kate Fitch, Michele Barrios, and Tyler Engel provide perspective in this healthcare reform paper.

Bundled payment claims analytics

Bates-DougAs healthcare reform progresses, there will be increasing pressure on the healthcare system to reduce costs while improving the quality of care. In order to meet these new challenges, many experts are looking for opportunities to reduce the fragmentation of care in the current system by better aligning providers. If facility and professional providers share accountability for the total cost of care, not just for the component of care they provide, many believe this will lead to more standardized care, lower overall cost, and improved quality outcomes.

One current payment reform concept is bundled payments. Under a bundled payment, a single payment is made by a payor for the total cost of care for a defined episode of care. Most commonly, these episodes include a hospital admission and all relevant healthcare services provided 30, 60, or 90 days after the admission. The bundled payment represents the total reimbursement for all providers involved in the patient’s care during the defined episode. The various providers need to agree on how to split and share that single payment. This requires that all providers—acute care facilities, professional facilities, and rehab facilities—understand their own costs, as well as the costs of the other providers, to ensure adequate profitability. Medical complications increase costs, so all providers are incentivized financially to ensure that the highest quality of care is provided for the patient.

Entering into a bundled payment contract requires a tremendous amount of planning and data analysis. Facilities and physicians need to come together to analyze costs across all diagnosis-related groups (DRGs), including services incurred after discharge.

Accurate data is critical for a sound analysis. To begin the process, data must be grouped into bundled events, or episodes. Using inpatient admissions as the starting point, group all claims for the same patient throughout the course of admission and for at least 90 days post-discharge (a preadmission time period may also be considered). Organize the claims into time periods (e.g., inpatient, 30-day post-discharge, etc.) and maintain detailed claim information such as procedure codes, diagnosis codes, and provider IDs to enable a thorough analysis of the drivers of cost throughout the course of treatment.

Once the data are grouped, review the results by admission type to identify the higher-volume and higher-average-cost events as displayed in the report below. Higher frequency and higher-cost events may represent the greatest opportunity for savings, but this is just the beginning of the analysis. Beyond the average cost per event, it is important to drill into admission types of interest and assess the variance in cost across similar bundled events. Care for event types with greater variance in cost may be more difficult to standardize and pose more financial risk for providers under a bundled payment contract.

Bundled Payment Claims Analytics_Doug Bates_Image 1

In the exhibit above, DRG 470, “major joint replacement or reattach lower extremity without major complication” represents a higher-frequency, higher-average-cost event type. Opportunities to reduce inpatient expenses such as length of stay and device costs all need to be considered but the analysis cannot be limited to the inpatient setting. The types of services and the timing of those services provided after discharge also need to be considered. Readmission rates, utilization of skilled nursing facilities/rehab facilities, ongoing professional visits, and therapies all need to be evaluated as displayed in the chart below.

Bundled Payment Claims Analytics_Doug Bates_Image 2

In summary, to prepare for bundled payment contracting, organizations must build actuarial models to establish baseline costs, identify areas where there is variance within the treatment patterns, and gain support from all stakeholders regarding treatment guidelines. A robust analytic environment with complete accurate data along with relevant benchmarks is essential for the planning process.

This article first appeared at Milliman MedInsight.

Bundled payment claims analytics

A new blog post at Milliman’s Healthcare Analytics Blog assesses the analytics associated with bundled payments as a means of reducing healthcare costs while improving the quality of care.

Planning and data analysis is important so that healthcare providers that agree to accept bundled payments know how to split and share that single payment. Here is an excerpt describing bundled payment claims analytics:

Accurate data is critical for a sound analysis. To begin the process, data must be grouped into bundled events, or episodes. Using inpatient admissions as the starting point, group all claims, for the same patient throughout the course of admission and for at least 90 days post discharge (a pre-admission time period may also be considered). Organize the claims into time periods (inpatient, 30 day post discharge, etc) and maintain detailed claim information, such as procedure codes, diagnosis codes and provider IDs to enable a thorough analysis of the drivers of cost throughout the course of treatment.

Once the data are grouped, review the results by admission type to identify the higher volume and higher average cost events, as displayed in the report below. Higher frequency and higher cost events may represent the greatest opportunity for savings, but this is just the beginning of the analysis. Beyond, the average cost per event, it is important to drill into admission types of interest and assess the variance in cost across similar bundled events. Care for event types with greater variance in cost may be more difficult to standardize and pose more financial risk for providers under a bundled payment contract.

Read the entire assessment here.

Also, read this healthcare reform briefing paper entitled “Evaluating bundled payment contracting” for additional considerations for bundled payments.

Evaluating bundled payment contracting

Alternatives to traditional fee-for-service (FFS) reimbursement have gained attention as financial pressures mount and as many recognize how FFS may not provide incentives for efficient care. The recent Centers for Medicare and Medicaid Innovations (CMMI) Bundled Payments for Care Improvement Initiative is a prominent example, as are private payor contracts.

This healthcare reform briefing paper provides an overview of bundled payments and discusses recent developments, as well as an analysis of considerations in contracting for bundled payments.