Expert takes on 'myths' about bundled payments

There are many misconceptions about bundled payments that hold payers and providers back from embracing these models--but they shouldn't, Francois de Brantes, executive director of the Health Care Incentives Improvement Institute, says in a webcast hosted by the Association of Health Care Journalists.

For instance, many people think bundled payments are only effective for specific procedures and also don't address the appropriateness of procedures, de Brantes (pictured right) says. However, bundles actually can cover two-thirds of the total cost of care, and condition-based bundles include procedures, so they do in fact address their clinical appropriateness.  

Many also think that bundled payments are difficult to administer, but in reality, any administrative challenges are "Kindergarten stuff" compared to the complexity of mutual funds or the stock market, de Brantes notes. Also, these challenges are easily solvable with the use of good-quality software.

The concept of bundled payments won't encourage physicians to skimp on care, he argues, because "if you're not doing a stellar job managing the patient on a day-to-day basis," he or she will have an avoidable complication, which will end up costing more. The patient-reported outcomes also have been "fantastic" in programs his organization has worked with, de Brantes says.

A 2014 report from the Robert Wood Johnson Foundation identified bundled payments as a gateway to overall payment reform, noting that they offer the opportunity to prepare for "future demands of healthcare transformation." And the Centers for Medicare & Medicaid Services announced last month that its bundled payment pilot project, which saved $1 million in its first year, will add 360 more providers to the program.

There also are plenty of states, health plans and employers that have successfully explored the realm of bundled payments, de Brantes adds. For example, Ohio, Tennessee and Arkansas are pursuing large-scale bundled payment programs for chronic conditions, acute care and various procedures. Arkansas, which boasts the oldest state-run program, has implemented a particularly wide-reaching bundled-payment model, he notes.

Well-known health plans also have gotten into the game, including Cigna, Blue Cross Blue Shield of New Jersey and BCBS North Carolina. And employers are using bundled payments for domestic medical tourism. Even so, bundled payments make up less than 2 percent of all value-based contracts, according to the Catalyst for Payment Reform.

Finally, insurers should keep in mind that when they implement payment reform initiatives, form should follow function--not the other way around, de Brantes says. In other words, both commercial and private payers must focus less on specific organizational structures, such as accountable care organizations (ACOs) or patient-centered medical homes (PCMHs), and instead let the shape of the organization emerge naturally from the functions they want to accomplish, such as lower costs and better patient care.

It's really the "height of hubris and arrogance" to assume that one model is better than another, he says, adding, "there's so much more that could emerge if we didn't have blinders on that say 'it's got to be a PCMH, it's got to be an ACO.'"

Read more on