It is widely recognized by policymakers and payers that our nation’s healthcare system is fragmented, creating gaps in care for patients. Researchers believe that part of this fragmentation is a result of the separate payments furnished by Medicare for each provider type that a patient may encounter during a single care episode.

This assertion led to the Bundled Payment for Care Improvement (BPCI) initiative, which was established under the Affordable Care Act.

What Is the Bundled Payments for Care Improvement Initiative?

Under the authority established within the Affordable Care Act, the Centers for Medicare and Medicaid Services (CMS) created the “Innovation Center” with the responsibility of supporting and testing innovative payment and delivery care service models. The goal of the efforts is to deliver higher quality, more coordinated care at a lower cost.

Because evidence-based research has shown that a bundled payment for care provided across settings may align incentives across provider type and encourage them to work collaboratively, bundled payments are among the models being tested within the Innovation Center.

What Implications Will Bundled Payments Have on Patient Care?

Within a healthcare system that is seeking to recognize and reward value over volume – patients are the clear winners within the equation. Bundled payments, as well as other health reforms such as Accountable Care Organizations and patient-centered Medical Homes, build in financial incentives that encourage enhanced care management and closer alignment among clinicians and providers. This collaboration will contribute to fewer gaps in the delivery of medical care.

How Are Bundles Performing?

A 2013 report released by Booz & Company included the results of an online survey of more than 400 physicians and 150 hospital executives which found interesting differences between those participating in bundles and those that were not. Sixty-four percent of the survey respondents that are already involved in a bundle reported cost savings.

The input from providers highlighted the fact that larger provider organizations represent the majority of bundle participants. In fact:

• 53% of hospitals with greater than $1 billion in patient revenues reported that they have already taken action in a bundle.
• Whereas only 24% of hospitals that have less than $1 billion in revenues have participated in a bundle.

Smaller providers agree on the potential benefits, but are more cautious because of the uncertainty and complexity in participating in a bundle.

Initial results for those providers participating in bundles are positive, but the survey also revealed several significant challenges for providers.

• According to survey respondents, the greatest challenge to hospitals in the design component was establishing the risk and gain sharing arrangements.
• In regard to implementation, two components ranked highest: persuading physicians to deliver against bundles and integrating clinical and administrative data.

The Future of Bundled Payments

While the precise future of bundled payments is unclear, early evidence of improved outcomes and savings to the Medicare program indicate that these arrangements will remain a viable option for providers seeking to provide better coordinated care. Additionally, consumers support the concept of care bundles – with an earlier Booz & Company survey indicating that more than three-fourths of the consumers surveyed are ready for bundles.

However, much is still unknown as to the success of the different types of bundles within the CMS pilot program. The BPCI initiative is still in its initial 3-year window, therefore a full analysis of the performance of the participating providers is unavailable. But published reports have indicated the gain-sharing incentives have had a positive impact in the relationship and communication between bundle participants.

Additionally, the lessons learned from providers participating in the pilot program will be invaluable for the next generation of bundles.