Key Payer and Provider Operational Steps for Successfully Implementing Bundled Payment

Key Payer and Provider Operational Steps for Successfully Implementing Bundled Payment

This is the third in a series of annual issue briefs that have tracked the development and implementation of bundled payments in the public and private sectors.  This brief builds upon the two previous issue briefs  by providing a more in-depth review of the operational steps health plans and providers are taking to be successful under bundled payment.  Our findings are based on interviews with seven payers, seven providers, and one organization selected as a convener.

We found two emerging trends for payers implementing bundled payments:

  • A limited number of public and private payers are now committing to bundled payment as a core payment and delivery reform strategy and, therefore, they are significantly expanding the scope of their efforts to include more providers and more episodes.  Bundled payment is no longer a payment method assigned only to pilot status.
  • These same payers are automating what have been manual, resource-intensive processes and are making significant investments to do so.  They are also simplifying their bundled payment methodologies to make them easier for the payer and its contracted providers to administer.

The predominant trend among providers embracing bundled payments is their commitment to developing and implementing comprehensive systems of care that continue for the duration of the bundle, and that include all caregivers.  Although the providers we interviewed are predominantly implementing orthopedic bundles (i.e., knee and hip replacement bundles), many of their approaches to building systems of care are applicable to other types of bundled payments.  With the Centers for Medicare and Medicaid Innovation’s (CMMI) Bundled Payment for Care Improvement (BPCI) initiative, the types of services to which bundled payment models are being applied have greatly expanded.

While the number of providers and payers implementing bundled payments is relatively small, we observed growth in the adoption of bundled payment initiatives.  In Arkansas, implementation of the Arkansas Healthcare Payment Improvement Initiative propelled much broader bundled payment implementation within the commercial and Medicaid markets, and across a variety of procedures and conditions.  The Ohio and Tennessee Medicaid programs are also in the process of implementing bundled payment programs that are modeled, at least in part, on Arkansas’ work.  With the Medicare BPCI initiative, and three state-based programs implementing bundled payment programs on a large scale, a movement towards broader adoption of bundled payment may be on the horizon.