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Tom Price might soften bundled payments, but healthcare orgs will stay the course

Insurers are already seeing success, experts say, and they won't be quick to give up those savings.

Susan Morse, Managing Editor

The Centers for Centers for Medicare and Medicaid Services will restart a delayed mandatory bundled payment model, probably with changes, and possibly as a voluntary program, experts predict.

But even if U.S. Health and Human Services Secretary Tom Price -- who is no fan of the mandate -- makes the program voluntary, providers and especially payers will accelerate towards these alternative payment models.

"I think the private market is going to move this on its own," said Attorney Colin Luke of Waller, a healthcare law firm in Birmingham, Alabama.

Payers need more predictability in cost, and bundles provide a tangible way to get there, according to Carolyn Magill, CEO of Remedy Partners, a firm that provides services to close to 70 percent of participants in CMS' Bundled Payment for Care Improvement initiative.

[Also: Expert: Trump administration 'buying time' by delaying bundled payment programs]

"There's been an increasing adoption and curiosity," Magill said.  "Three or four years ago, it was more about curiosity. Now the traction is happening."

In March, CMS delayed two mandatory bundled payment programs for cardiac and orthopedic care to May or possibly next year to allow time for additional review.

The delayed rule mandated alternative payment programs for heart attacks and bypass surgery, as well as new coverage for surgical hip and femur fractures, at more than 1,000 hospitals in 98 metropolitan areas.

"I think it's signaling there's a new sheriff in town and he's more provider focused," Luke said.

Former CMS Administrator Charlene Frizzera also believes Price will put his own stamp on the bundled models. But CMS must do something because while the programs were delayed, the payments were not, said Frizzera, who is now president of CF Health Advisors and PeerWell Advisor. 

"They didn't delay when the payment was going to start," Frizzera said. "The payment is legislated to start in 2019. There would be nothing to go back to."

The former formula for paying physicians under the sustainable growth rate, or SGR, is dead, having been replaced by the Medicare Access and CHIP Reauthorization Act. Changing payments under MACRA would take a legislative decision.

MACRA includes two payment paths: the easier merit-based incentive system, and the more financially attractive but riskier advanced alternative payment model.

[Also: CMS delays 2 bundled payment programs]

"They have to do something for MIPS to work," Frizzera said. "There's no alternative. They can't say they're not doing anymore APMs, the community will go crazy because that's where the money is."

Changing the system would be difficult since a bipartisan Congress overwhelmingly approved MACRA last year.

"It will be very difficult," she said, "because (CMS) is saving better money and they're providing better healthcare. If they take it away, they have to find money to back up the shortfall. Bundles are working. The Congressional Budget Office budget estimates it will save money over a 10 year period."

Magill said that bundles have demonstrated savings across settings and geographical populations. For example, a 7.7 percent savings across businesses equates in $120 million saved to CMS, she said.

Bruce Carver, associate vice president of Payer Services for MedeAnalytics, also thinks bundles are working and believes CMS should keep the program mandatory to keep a wider swath of provider participants.

"Directionally, payers and providers feel it's a good direction to move in," Carver said. "If it becomes voluntary, they're only going to get the providers that feel they can make money."

"Since hospitals have gone down this march (to value-based care), we've seen payers meet them on the private side," said Carter Paine, chief operating officer at NaviHealth, which works with 60 hospitals on the Bundled Payments for Care Improvement  initiative, including three of the largest, Community Health Systems, HCA and Dignity Health. "Providers are taking more risk with payers, such as on Medicare Advantage. I don't see any reason that's going to halt."

Magill said Medicare Advantage operations have been around risk adjustment, which is great, but that's been about increasing revenue. Bundles are about managing the population.

The BPCI program removes the inertia by mandating clinicians look out at the next 90 days for a patient after their operation.

"Now they're thinking, 'Can this patient go home and stay home?" Magill said. "There's no doubt in my mind that will continue. It feels like there's a broad recognition, we need a new way of looking at things. Bundles have been so effective in driving systemic change.".

[Also: As payers see success in bundled payments, critics say model needs fine-tuning]

Frizzera said providers are also looking at prehabilitation program for joint replacement candidates. Hospitals have found they can contain costs by improving patient health pre-procedure, reducing the amount of time spent in an expensive rehab facility.

"In joint and hip replacement bundles, the surgeons have embraced the idea of a more holistic service," Frizzera said. "It's not only saving money but creating better healthcare. This is more than what the rules required."

Frizzera also doesn't believe that CMS will get rid of its Innovation Center, where new models are tested. CMMI has come under fire from some Republicans who believe agency officials have used the center to sidestep Congressional funding approval.

Price is no fan of mandatory bundles because CMMI mandated some of the programs before doing enough of a demonstration, Frizzera said.

"Where CMS started making people angry was the Part B demonstration model. They said you have to participate," she said. "In my opinion, they will continue the bundles. They'll look different than they do now."

Twitter: @SusanJMorse