SEPTEMBER 17, 2019

Welcome to the Bundled Payment Update eNewsletter
Editor: Philip L. Ronning
This issue is sponsored by the National ACO Summit, the National Bundled Payment Summit,
the National Medical Home Summit, and the National MACRA MIPS/APM Summit

Providers Don't Take Enough Risk to Bend the Cost Curve
Back in 2015, 20 major health systems and payers pledged to convert 75% of their business to value-based arrangements by 2020. Today, more than two-thirds of payments from U.S. commercial health insurers are tied to some kind of value-based model. By 2021, the health plans expect three-quarters of their payments will be value-based. However, a recent analysis of Change Healthcare data by Modern Healthcare found that the percentage of value-based revenue tied up in upside/downside risk contracts was in the single digits. Among the types of two-sided risk contracts that provider organizations had were capitation or global payment (7.3%), pay for performance (6.5%), prospective bundled payment (5%), population-based payment (5.8%), and retrospective bundled payment (4.1%). An AMGA survey picked up signs of a recession in risk contracting in 2016. A year earlier, survey respondents--mostly large groups--had predicted their organizations would get 9 percent of revenue from capitated products. In 2016, the actual figure was 5 percent, according to a Health Affairs post by the AMGA's Chet Speed and the late Donald Fisher. The authors cited a number of obstacles to the spread of risk contracting, including "limited commercial value-based or risk-based products in their local markets; the inability to access administrative claims data from all payers; the massive administrative burden of submitting data in different formats to different payers; lack of access to investment capital; and inadequate infrastructure." (The Health Care Blog, September 4, 2019)

Michael Thompson on Employers Engaging on Value-Based Reimbursement

Currently, employers choose health plans based on administrative costs and provider discounts, but they need to start engaging around value-based reimbursement, said Michael Thompson, president and chief executive officer of the National Alliance of Healthcare Purchaser Coalitions. See the transcript of the interview here. (American Journal of Managed Care, September 4, 2019)

Shifting the Burden? Consequences of Postacute Care Payment Reform on Informal Caregivers
In 2015, Medicare spent nearly $60 billion on institutional postacute care, an amount that has rapidly increased in recent years. In fact, nearly three-quarters of the geographic variation in total Medicare spending is driven by the variation in postacute care spending alone. Taken together, these patterns call into question the value of postacute care and especially its return on investment for patients. Given its growing contribution to US health care costs, postacute care has become a common target for efforts to reduce costs under alternative payment models, such as bundled payments and accountable care organizations (ACOs). These models are increasingly holding hospitals responsible for the costs of care provided during the post-hospitalization period. Recent evaluations have found that cost savings achieved under alternative payment models are driven almost entirely by a decrease in the use of inpatient postacute care. This trend is largely the result of a compensatory increase in the number of patients who are being discharged directly home, and thus bypassing the postacute care setting altogether. The push to discharge more patients directly home after hospitalization may seem preferable in some circumstances. In addition to being financially sensible by decreasing spending on postacute care, patients might prefer to be discharged home rather than to an institutional setting. In this way, getting patients home may represent a rare opportunity to align goals across patients, payers, and health systems. However, these gains must be viewed in the context of the costs borne by those who care for patients once they are discharged home--informal caregivers. (Health Affairs, September 9, 2019)

HIT Think: Why Episode-Based Analytics Help Unlock Healthcare Value
By enabling healthcare organizations to better assess risk at the patient level and develop a more nuanced understanding of care delivery, episode-based analytics are essential to the healthcare industry's shift from volume to value. Episode-based payments, or bundled payments, have become an increasingly important part of value-based care agreements between payers and providers in recent years. An episode of care is a group of clinically related services delivered to a patient over time, such as the term of a pregnancy culminating in delivery, or a knee replacement and rehab. Many episode-based payment models have shown potential to lower costs while maintaining or improving quality. For example, Horizon Blue Cross Blue Shield of New Jersey reported that its episodes-based program for commercial and Medicare Advantage Plan members reduced hospital readmission rates after hip replacement by 37 percent and the rate of C-sections among pregnant women by 32 percent. (Health Data Management, August 12, 2019)

Why Addressing Social Factors Could Improve US Health Care
Health in the US is a tale of two starkly different realities. The better-off and well-connected are not only in a stronger position to receive care when they need it, but they also start off with advantages that have a tremendous effect on health -- in housing, employment, stress levels, food security, social capital and more. A 2008 report on social determinants of health from the World Health Organization said it plainly. It might not be surprising that the poor have higher levels of illness and mortality. However, the report said, "in countries at all levels of income, health and illness follow a social gradient: the lower the socioeconomic position, the worse the health." "Every single session I have in my clinic I see the downstream effects of social factors," says Dave A. Chokshi, chief population health officer for NYC Health + Hospitals -- New York's public health care system -- and an attending physician at Bellevue Hospital. "I think about my patient with diabetes whose blood glucose levels I haven't been able to get under control because he can't take the insulin I prescribe because he lives in a homeless shelter and has no place to refrigerate it. Or the person with advanced liver disease related to alcohol use exacerbated by his sporadic employment. When you trace back to the causes of the causes of illness, in so many cases you see how our social fabric itself needs mending." But broad changes are taking shape. Payers of health care are increasingly incorporating the concepts of social determinants of health into the way they think about reimbursing for health care services and providing incentives for health care delivery organizations, says Risa Lavizzo-Mourey, senior fellow at Penn's Leonard Davis Institute of Health Economics, population health and health equity professor at Penn Nursing and the Perelman School of Medicine and Wharton professor of health care management. That, she says, "is a new development and one that obviously creates a lot of questions and opportunities for good research to really figure out how to best incorporate social determinants of health into reimbursement plans, how to make them focused on populations and not solely on the individual, and then to look at what kinds of bundles of social determinants are going to lead to the best outcomes. It's a very interesting and exciting time." (Fair Observer, August 31, 2019)

Brooklyn Doctors Create Accountable Care Organization to Build on DSRIP Work
Community Care of Brooklyn Independent Practice Association has become a state Department of Health-certified accountable care organization. The Centers for Medicare and Medicaid Services has also approved the ACO to participate in its Medicare Shared Savings Program. The designation marks the latest value-based payment program the association has entered into with the goal of continuing partnerships, investments and improvements in population health, which began under the Delivery System Reform Incentive Payment program. It further positions the group to continue efforts in Brooklyn with or without DSRIP, which is scheduled to come to an end next year unless it's renewed. As an accountable care organization, the association will work to reduce unnecessary spending and improve quality of care for Medicare fee-for-service beneficiaries receiving services at one of 65 participating sites, including hospitals, ambulatory care programs, private practices, federally qualified health centers and behavioral health clinics. The designation will help the association expand the reach of its DSRIP initiatives and design Medicare-specific resources. It also will provide it with opportunities to earn shared savings that can be reinvested in infrastructure and care processes and distributed among participating providers. The designation follows the association's establishment last year to continue the progress made by Community Care of Brooklyn Performing Provider System, which is led by Maimonides Medical Center in the DSRIP program. As a separate legal entity, the association can enter into contracts on behalf of its network. Securing the designation has been contemplated since the beginning of the DSRIP program, said Dr. David Cohen, executive vice president and chair of population health at Maimonides as well as chair of Community Care of Brooklyn and a board member of the association. The program is meant not only to encourage delivery system reform but also payment reform, with a focus on moving into value-based payment agreements to achieve higher quality care at a lower cost. (Crain's New York Business, September 3, 2019)

Medicare's Bundled Payment Model Did Not Change Skilled Nursing Facility Discharge Patterns

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The Future of Delivery System Reform: What Might we be Missing?

Elliott S. Fisher, MD, MPH
Professor of Health Policy and Clinical Practice, The Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, NH