4 keys to ensure physician groups succeed in bundled payment programs

A stethoscope and paper money.
A St. Louis physician practice shares the lessons it learned participating in a voluntary bundled payment program. (Getty/utah778)

A St. Louis physician group practice has made bundled payments work—managing to cut costs and improve quality outcomes to receive a savings payment from Medicare.

Signature Medical Group, Inc., an independent, multispeciality group, both participates in the current Centers for Medicare & Medicaid Services’Bundled Payment for Care Improvement (BPCI) Initiative and also serves as a “convener” that brings together and manages more than 50 other orthopedic physician group practices taking part in the bundled payment model, write Betsy Engle, Ph.D., its director of research, and Joel James, its director of public and government affairs, on NEJM Catalyst.

Bundled payments are part of the shift toward reimbursements based on value and not simply on the volume of services provided. In the 2016 performance period, Engle and James said the participating practices reduced average CMS claims-based postacute costs for elective lower-extremity joint replacements by $5,381 or 37.5% per surgery compared with a baseline. The practices also saw a decline in adverse outcomes, ranging from a 23% reduction in acute myocardial infarction within seven days of surgery to a 72% reduction in pulmonary embolism during the patient’s initial acute care stay.


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With CMS launching a new voluntary version of the bundled payment model, BPCI Advanced, that will begin in October, Engle and James zeroed in on four common elements they say will drive physician groups to embrace bundled payments.

1. Physician engagement. This is essential to success. “Engaged physicians motivate the entire care team and the patient, drive care plan improvements and advance the idea that care coordination across the episode is the goal,” they said.

2. Care coordination. A properly structured program encourages communication and coordination of care among a wide variety of providers, such as the partnering of physician group practices with a preferred network of postacute care providers willing to work together.

RELATED: 3 key elements for the next generation of bundled payments 

3. Data analytics. Effective use of data analytics can help providers address resistance directly and move past it, they said. For example, data on individual physician performance allows a doctor to compare his or her performance with colleagues. That can encourage healthy competition and motivate doctors to find ways to improve, they said.

4. Patient optimization. Success requires an increased focus on patient optimization by addressing manageable conditions prior to surgery, they said. Orthopedic surgeons can connect patients with resources to manage conditions such as diabetes, smoking, mental health and other issues. For instance, a licensed clinical social worker can help a patient with depression or anxiety, which can negatively impact surgical outcomes.

CMS has designated BPCI Advanced as an Advanced Alternative Payment Model, which will allow participating physicians to qualify for a 5% Medicare incentive payment under MACRA.

Announcement of the new voluntary bundled payment model came shortly after CMS decided at the end of November to cancel two mandatory bundled payment programs formed by the CMS Innovation Center under the Obama administration.

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