HCI3 Update from the Field: CMMI Bundled Payment Pilots –Two Tectonic Shifts

Submitted by francois.debrantes@hci3.org on Friday, September 2, 2011 - 01:00

HCI3 Update from the Field – Newtown, CT

The day the CMMI announced its Bundled Payment pilots, there were two tectonic shifts – the first shook the East Coast of the US, and the second will continue to shake the health care industry for years to come. In launching what could be the largest shift in mode of payment in the history of Medicare, CMS has sent a definitive signal to hospitals, physicians, and other health care providers that the day of value-based payment has come. The four models currently included in Phase 1 cover inpatient stays and post-acute care, with options and flexibility that should make the pilots appealing to any clinical team. However, sometimes, a plethora of options can create as much of a freezing effect as no options. In this instance, potential applicants have to answer two fundamental questions:

  1. How do I organize the team contractually to participate?
  2. How do I define and estimate an episode price?
During the next two weeks we will be bringing answers to these questions with case studies, guidance and tools. And to the extent they're willing, we'll collaborate with others in the industry to create these guides and tools. Importantly, for hospitals, surgeons and others wondering how to answer the second question, know that our Evidence-informed Case Rate analytics (free to download on our web site) can be run through Part A and B Medicare claims and provide an estimate of episode prices. The ECRs also are fully defined and those definitions can be used as part of the pilot application. What might seem daunting really isn't, and everyone that can should apply for this pilot opportunity.
What this means to you – for private sector payers, the last barrier to widespread adoption of bundled payments has fallen….CMS is in the game. The other barriers — lack of standardized definitions of episodes, and claims accounting solutions — have already fallen. As such, at this point, it is the private sector that risks being an anchor to the widespread adoption of value-based payment. For hospitals, physicians and other providers who have been claiming the mantle of value, it's time to put up or shut up. Many have rightfully complained that the lack of CMS participation created a significant free ride effect that prevented them from fully embracing internal re-engineering to produce value. Well that's no longer true. So the claimants will soon be shown up to be for real, or fakes. The excuses by the fakes have already shifted to: we're busy with our re-organization, or our integration of acquisitions. Well in all other industries if you're too busy with other things than offering value to your customers, you go out of business. That day is coming to the health care industry and will come even sooner as private sector plans join the fray. On November 4th we will find out which hospitals and physicians are serious about offering value and which ones are not — separating the wheat from the chaff. We will highlight both for all to see. Let the tectonic shift continue its course and throw off the chaff.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org