Prospective Bundles Present a Unique Opportunity in Value-Based Care, but Come with Challenges

In the world of alternative payment models, bundled payments are a promising option to help organizations focus on cost savings and quality improvement. Bundled payment programs identify existing episodes of care that often involve multiple providers – and in some cases, facilities – and set a single price to be distributed among those involved in the patient’s care.

Bundled payments are a key part of value-based care (VBC) because they incentivize multiple providers and facilities to coordinate care and improve efficiency, while also improving outcomes for patients – and they do all of that with an eye on reducing costs for these common episodes of care.

The Texas Heart Institute, under the leadership of Dr. Denton Cooley, formed the first bundled payment program in the U.S. in 1984. Dr. Cooley also established CardioVascular Care Providers (CVCP), an integrated network of physicians in Texas who would perform these procedures. This year the organization is celebrating its 40th anniversary of offering world-renowned cardiovascular care in Houston and the surrounding regions.

PROSPECTIVE VS RETROSPECTIVE BUNDLES

Within the bundled payment world, there are two different options: retrospective and prospective bundles. Both identify an episode of care and the various claims that will be involved, including evaluation and consultation, inpatient, outpatient, rehabilitative, and follow-up care as needed.

Retrospective bundles reconcile the costs and distribute payment after the procedure is complete, with the ability for payers to adjust the payment down if the price doesn’t meet a predetermined target. This model is still essentially fee-for-service. Retrospective bundles do include some upside and downside risks for providers but lack some of the key factors that truly lead to behavior change, and thus lower costs and better quality. Key among the things missing from a retrospective bundle:

• Feedback on how their rates compared to the payer’s target costs
• Specific knowledge of whether their costs contributed to, or detracted from, potential savings within the whole bundled pricing
• A timely true-up process that informs participants about specific actions within a bundled care episode (as a fee-for-service model, these bundles often take months to adjudicate and reconcile, limiting the opportunities to improve care)

Thus, while retrospective bundles can offer limited opportunities to meet VBC goals, they don’t provide a good long-term answer to combat rising costs in healthcare.

Prospective bundles set a procedure price in advance. This arrangement requires that every member of a care team take on risk. With the price set in advance, everyone knows exactly what their fees will be and can focus on how to reduce costs within their area of expertise. Further, since a significant portion of risk in prospective bundles comes from complications after the surgery, each member of the team is incentivized to optimize care quality and minimize these clinical and financial risks.

PROSPECTIVE BUNDLES BENEFIT EVERYONE

Bundled payments incentivize the right behaviors in each episode of care and offer a win-win-win for everyone involved. The benefits of prospective bundles include:

• Predictable pricing for payers and providers – payers know what an episode of care will cost them, and providers know what they will get paid for a given episode of care
• Clearly defined care activities that are covered as part of the bundled payment, with each piece of a bundled arrangement outlined and priced in advance
• Incentives to avoid preventable complications, which increase care quality for patients and improve long-term outcomes while lowering costs
• Collaborative care where everyone involved in a care episode has an incentive to work together for the benefit of the patient

Further, bundled payment arrangements present an opportunity for many specialists to participate meaningfully in value-based care activities. Since much of VBC focuses on prevention, which tends to fall to primary care providers, specialists have fewer opportunities to participate in risk- and reward-based models.

KEY CHALLENGES IN ADMINISTERING PROSPECTIVE BUNDLES

Bundled payment programs – particularly prospective bundles – don’t come without some challenges.

• Providers and facilities participating in these programs must shift away from fee-for-service models that have long dominated specialty medicine.
• Everyone must be ready and willing to take on risk and have tools at their disposal to understand their performance, as well as the levers they can pull to improve care and lower costs within a given performance year.
• Administrators need the capacity to identify high-performing providers and recruit them into the bundled payment network.
• Conversely, administrators must be able to identify low performers within a program and help them understand how they can improve care quality and efficiency to reduce costs.
• Both payers and providers must be able to use data to uncover areas of potential uncontrollable exposure and mitigate it with appropriate protection.

PARTNER WITH CEDAR GATE TO EXCEL IN PROSPECTIVE BUNDLES

At the heart of a successful bundles program is the ability to effectively use data. Cedar Gate’s full-service Bundles Program Management provides organizations with powerful analytics and decades of expertise in modeling, designing, administering, and optimizing prospective bundles.

Our Value-Based Care Analytics offers the capability to uncover prime opportunities for bundled payments, build a network of engaged physicians and facility partners, and efficiently administer even the most complex bundled payments. Cedar Gate offers dozens of predefined bundles, or the ability to customize any bundle based on your unique market needs. Additionally, our team will:

• Find and recruit high-performing providers into your network
• Establish bundles agreements with providers, payers, and employers
• Review performance and recommend opportunities to optimize existing bundles
• Run all aspects of a bundled payment program, including accounts receivable and downstream payment distributions
• Evaluate market trends and present opportunities for new bundled payments

Cedar Gate’s industry-leading bundles payment program is your ticket to succeeding in value-based care alternative payment models like prospective bundles. Discover the potential for building your own bundled arrangements that prioritize the well-being of your patients while helping providers and payers achieve cost and quality savings.