Moving into the bundled payments era: 5 key considerations

Practice Management

As the Trump administration begins, it is unclear how the ACA will change. However, certain provisions, including the Comprehensive Care for Joint Replacement model have proven effective and cost-efficient.

"Yes, we are seeing a real rise in the prevalence of bundled payments programs, starting in 2016 with the service areas CMS set aside for CJR," says Brad Bostic founder and CEO of, a company that aims to personalize the healthcare experience via technology. "The results have been what they hoped for. Under bundled payments costs are lower and the quality is the same. This is driving an accelerated push to bring that bundled payments approach to cardiac care episodes."


Bundled payments are most successful when focused on episodes of care that are relatively predictable. Advanced cancer patients, for example, would not be good candidates for a bundled payments program because it is difficult to predict how each patient will respond to treatment.


Thus, CMS will be looking to bring bundled payments to specialties where the procedures are high-cost, but predictable. Bundled payments programs are driving collaboration between different organizations that previously would have kept each other at arm's length.


For example, surgeons are now interested in following the patient from the hospital into the skilled nursing or rehabilitation facility. If the patient is readmitted, the surgeon would be penalized.


"Bundled payments provides an incentive for the healthcare industry to collaborate as the patient journey takes them through different care settings," Mr. Bostic says. "It is no longer a disconnected, siloed approach to care delivery.”  


This incentive also helps improve the patient experience, as providers are keeping track of the entire episode of care for each patient. Thus, caregivers are discovering ways to be efficient and incorporate technology into their practices to help them keep track of each patient well after their time in the operating room.


Here are five key thoughts on setting up a bundled payment program:


1. Understand requirements. For example, in the CJR model, providers are required to stay within a calculated average cost across the episode of care, says Mr. Bostic. If the cost of care is too high, providers are penalized.


2. Look into sophisticated technology. Providers can use technology and state-of-the-art software to help them calculate these averages. Mr. Bostic notes they can also use technology to see where their average costs stand in comparison to other providers in their area as well as nationally to see how they are tracking.


"Let’s say the targeted cost per episode is $24,000," he says. "When you go through the actual care episode, all the various costs need to be aggregated — actual surgery fees, facility fees and the post acute care rehab component. You need technology to instantly view the aggregates and drill down to the patient level."


Additionally, providers need to be able to drive action with the data. Technology can help providers stay on top of the care their patients receive once they have moved on to the post acute setting and prevent readmissions in various ways, such as alerting a provider if their patient is nearing the length of stay limit at a skilled nursing facility.


3. Get on to the cloud. The cloud is the future of healthcare data collection and analysis. Patient information can be centralized and used to drive action and accountability, whether it's a bundled payment program or another incentive-based program.


"You need to have a cloud-first approach," says Mr. Bostic. "Don't get bogged down by the old thinking of 'everything is complex.' Create a true view that helps you understand all the relationships you need to manage, so you can make each customer your most important customer."


4. Don't get wrapped up in the syndrome of denial. Providers may have a tendency to underestimate how many workflow changes bundled payments programs will bring. If you don't invest in automatically tracking your episodes of care and see how well you are doing, you won't get paid, says Mr. Bostic.


5. Avoid getting stuck in minutiae tied to legacy technology vendors. These vendors tend not be agile and innovative, notes Mr. Bostic. They may create, rather than remove, hurdles for you in terms of getting and leveraging data. Old school IT vendors typically charge huge fees for access to certain data or they want to build whatever you need built, rather than giving you the tools and partners to build it. Look to IT vendors who are open to partnering and exchanging information thereby supporting integrated models like bundled payments.


"The time is now," he says. "Data is power, and it is new currency for today's successful healthcare organization. The industry is no longer in the business of providing procedures, it is all about harnessing information and transforming it into insight to improve the healthcare experience at a cost level that has never been done before."


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