More on Reimbursement

New bundled payment models will switch power from hospitals to physicians, Altarum says

Expect CMS to release more voluntary bundled programs by the end of the year that focus on outpatient payments, expert says.

Susan Morse, Managing Editor

New bundled payment models will shift power from hospitals to physicians, according to the Altarum Institute's vice-president and director of the Center for Payment Innovation.

This week, the Centers for Medicare and Medicaid Services released a proposed rule cancelling mandatory programs for care coordination for certain episode payments and for cardiac rehabilitation. Both were scheduled to start on Jan. 1.

[Also: Voluntary participation in bundled payments will continue after CMS cancels mandatory initiatives, experts say]

CMS also made hospital participation in the Comprehensive Care for Joint Replacement model voluntary in 33 of the 67 mandatory areas.

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Francois de Brantes, vice-president and director of the Center for Payment Innovation at Altarum, said he expects CMS to release more voluntary bundled programs by the end of the year.

These programs will focus on paying physicians for outpatient care, said de Brantes, who has written against the bundled payment for care improvement initiative in Health Affairs because, in part, he believed it was hospital centric.

For one thing, Health and Human Services Secretary Tom Price, MD, is a physician who has been an outspoken opponent of mandatory bundles, de Brantes said.

[Also: Trump administration, HHS stepping away from Affordable Care Act promotion, bundled payments]

For another, with the elimination of joint replacement and cardiac mandatory bundles, physicians only have accountable care organizations left to qualify for advanced alternative payment model bonuses under MACRA, the Medicare Access and CHIP Reauthorization Act.

"For hospitals, this does have potentially significant implications," de Brantes said. "The focus of the prior administration was on hospitals, CEOs controlling the bundle."

Episode payments are currently triggered by inpatient stays.

New government models are expected to follow what commercial payers are already doing and pay for bundled reimbursement for care provided outside of the hospital setting, de Brantes said.

[Also: Bundled payment models for cardiac care, joint replacement, delayed]

"Physician-focused does not require a hospitalization," he said. "It creates a complete shift in the dynamic of who controls and who is the supplier."

Currently, the physician is the supplier because hospitals choose which physicians with which to work.

Under a physician-focused model, the facility becomes the supplier.

"What that means for facilities is they better get mean and lean quickly to compete," he said.

In this type of model, hospitals and physicians will collaborate to save money on surgical supplies such as blood units because all members of the care team will have an incentive to cut back on cost.

Currently, after the 90-day post discharge episode ends, hospitals  have no incentive to avoid readmissions, he said.

"The hospital makes money on crash and burn in the ambulatory sector. There's a counter incentive," he said. "The different dynamic is a conscious policy decision."

Hospitals will still take on voluntary bundles as they save money and  there's evidence they improve care, according to de Brantes.

[Also: Bundled payment models for cardiac care, joint replacement, delayed]

Medicare bundled payments have reduced joint replacement costs, with one system reporting cost reductions of more than 20 percent, according to an August 14 Advisory Board report.

The cancellation of the mandatory bundles is credit positive for nonprofit hospitals, according to Moody's Investors Service. This is because it gives them more time to prepare for risk-bearing, value-based reimbursement models.

Twitter: @SusanJMorse