Strong Signals Favor Bundled Payments to Reduce Cost of Care

Tuesday, October 21st, 2014
This post was written by Patricia Donovan

Besides piloting the use of bundled payments to enhance healthcare quality and efficiency, CMS’s 2013 introduction of CPT codes for physician management of care transitions after discharge signals the federal payor’s increased comfort with episodic-based reimbursement. Jay Sultan, associate vice president and chief product portfolio architect for TriZetto® offers his perspective on the future of bundled payments in healthcare.

Healthcare is such a cyclical industry. Anybody who says this is the new movement and it’s here to stay has a better ability to read the future than I do.

I believe that bundled payment is going to continue to increase adoption. And then I think we’ll see a pullback in rate of adoption that will be caused by two things: one will be just the fact that we’ll have picked off all the low fruit, and what’s left is harder. I’m sure there’s somebody out there who wants to do a bundle of fibromyalgia, but I don’t want any part of that. The second reason they’ll pull back is because they’ll learn some negative lessons.

One of the things about payment bundling to date, at least in the prospective payment bundling (think model four of the CMS program), is that many commercial programs are just getting started right now. One lesson to date is there just are no negative examples. There’s negative examples in retrospective payment bundling. For prospective payment bundling, we haven’t had failures yet. Those are inevitable and they’re going to come. And as they come, I think that will create a somewhat inhibiting effect.

But overall, it’s hard to imagine. What payment bundling does is change the inner purchase. We’re saying, we’re tired of buying CPT codes of services. Instead, we want to start buying longitudinal care as an episode, as a bundle. And that trend is exactly where capitation takes them, exactly where partial capitation takes us. It’s where our provider-run health plans take us. It’s just another point along the continuum of how much risk providers are taking.

I don’t think bundled payments are going to go away. CMS is signaling very, very strongly that this is part of its future, for a basic reason. It’s one of the few tools it has that can actually reduce the cost of care. For those who think that this is going to go away, I’d harken you back to the onset of DRGs. Today, DRG-based care is pretty pervasive. But it certainly doesn’t cover all of care. It doesn’t even cover all of hospital care. It doesn’t cover all of CMS hospital care.

value-based reimbursement
Jay Sultan is the associate vice president and product manager for value-based reimbursement at TriZetto®. With more than 12 years of consulting and development experience in the payer and hospital settings, Sultan is responsible for developing innovative solutions such as payment bundling and other forms of value-based reimbursement. He is also providing leadership on the adoption of clinical analytics into TriZetto solutions.

Source: Value-Based Reimbursement Answer Book: 97 FAQs on Healthcare Models, Measures and Methodology

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