Private payers can show providers the value of bundled payments
WASHINGTON – Federal bundled payments efforts promise providers a share in savings for improved quality and lower costs, but it will likely take the squeeze in fee-for-service Medicare payments to drive many providers to participate.
Many providers say they are hesitant to participate in the models being tested by CMS' Center for Medicare and Medicaid Innovation (CMMI) because of the risk to their practice in carrying out the changes, according to Paul Ginsburg, president of the Center for Studying Health System Change, a healthcare policy research organization.
"We need the improvement in value from revised payment systems. And we only have so much time to play around with pilots," Ginsburg said Oct. 13 at the first National Bundled Payments Summit in Washington.
The Bundled Payments for Care Improvements initiative, released in August, provides for four models for designing bundled payments but were developed to allow for ample flexibility, said Valinda Rutledge, director of CMMI's care models group in CMS and former CEO of CaroMont Health and BonSecours St. Francis Health.
"CMS wants to move from volume to value. But we need to test new ideas quickly and evaluate them if they can be scaled up," she said.
CMS' flexible bundling approaches specific episodes of care, Ginsburg said. Episodes with the greatest potential for bundled payments are those with great variation in quality and resources needed, ease in risk adjustment and those with potential for better coordination.
"But we have to start thinking how we will evolve from pilots to revised payment systems," Rutledge added.
For instance, the provider benefits from being involved with multiple payers. "If you're going to invest and change your delivery, you want as large a part of your revenue to be based on the reformed system," he said.
Private payers have a stake in this change as well, Ginsburg said. If the private insurers can wield enough leverage, they can negotiate with large providers towards revised payment systems.
Medicare could learn from private payers the importance of engaging patients, Ginsburg noted. Large providers and plans can direct patients to those physicians who perform at higher quality and are more efficient using bundled payments. Payers can also give patients incentives to move to the higher value providers.
"The point of reform is to make progress in fee-for-service. But holding back engaging Medicare beneficiaries will slow that down," he said. Additionally, so many Medicare beneficiaries have supplemental coverage that it is a challenge "to create an incentive and not have supplemental coverage offset it and wipe it out."
However, CMMI's Rutledge said Medicare maintaining beneficiary choice must be integral. "I don't see narrowing the network or eliminating choice. I do see over the next few years that we will have to understand the beneficiary incentives that can be put in place to help them choose to move from a low-value network to a high-value network."
Indeed, past efforts into managed care and other attempts to cut healthcare costs offer valuable lessons, said Stuart Altman, health policy professor at Brandeis University. Providers and patients have said that quality was sacrificed to save money. "And patients felt the savings were going only to insurers and employers, but not to them," he said.
For more on reimbursement, see bit.ly/hfn-reimbursement