Lack of Understanding of How Some of Medicare’s BP Programs Work

Submitted by hci3-usr on Thursday, September 8, 2016 - 01:42

Newtown, CT – September 9, 2016

Seldom do I disagree with my colleagues at the Commonwealth Fund, but their latest post is truly a head-scratcherIn a blog post, David Blumenthal and David Squires seem to argue against themselves on a number of occasions and also show a surprising lack of understanding of how some of Medicare’s bundled payment programs work. First, it’s important to point out that there are several essential flaws to the voluntary, mandated and recently proposed bundled payment programs served up by CMS. These include: (a) lack of severity adjustment, which a recent paper highlights, and an HCI3 analysis had previously shown; (b) hospital centricity that, to CMS’s own acknowledgment limits the potential for site of service arbitrage and can also lead to further provider consolidation; and (c) failure to engage physicians in a meaningful way. Blumenthal and Squires, however, seem to point to contradicting issues. One is the lack of inclusion of certain services that are not linked to the core bundle, which can lead to a failure of coordinating care beyond the episode of care which is the focus of the bundle, and creates a potential for physicians to classify certain services as being related to another episode, thus presumably shifting costs and gaming the bundle (it’s a somewhat convoluted argument). And yet, the Medicare bundle does just the opposite. It includes all types of costs other than the ones related to the episode of care, and thus forces providers to coordinate the care of the patient’s co-morbidities. The second point, which has been made by others, is that lack of severity adjustment can lead to cherry picking. This issue, by the way, is not unique to Medicare’s bundled payment program, it’s also a problem for the ACO program. The last argument seems the most cogent and, to a large extent, the central one, namely that bundled payments may make it harder for ACOs to succeed if certain episodes of care are carved out by specialists who harvest the savings first. And yet this argument is the weakest of all (especially in light of (b) above).

What this means to you – Medicare’s bundled payment programs, in particular the mandated ones, are completely hospital centric, so making the argument that they can potentially make it more difficult for ACOs to succeed seems absurd, unless that ACO happens to be a physician-group led ACO, and in which case they’re already spending their days harvesting the savings from less efficient providers. But here’s a more fundamental point. So what? Why should harvesting low hanging fruit be reserved to the more inefficient of the provider structures around? We should all encourage the fastest routes possible to generating savings in the health care system before insurance exchanges collapse and the middle class gets squeezed even more by rising premiums and greater out-of-pocket expenses. And the real head-scratcher here is that the Medicare bundles, to an extent, favor the hospital-centric ACOs who are the most at risk according to the Davids. So why cry wolf for something that isn’t a reality, at least in the federally run APMs? More importantly, why not applaud that the transformation of the health care system can lead to lower costs for all consumers and press on the accelerator? Will that cause some bloated health systems to tighten the belt? Sure, and it’s about time because the rest of us have had to tighten our belts for more than a decade while the health systems gobbled up our cash and got fat. Let’s get our priorities straight here and focus on where the real pain is felt: in the consumer’s purse.


Francois Sig


Francois de Brantes
Executive Director