NOVEMBER 26, 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, the National MACRA MIPS/APM Summit,
and the National Medicare Advantage Summit

How to Deliver Value-Based Care and Eliminate Waste -- Frontline Insights from Baylor Scott & White Health & Northeast Georgia Health System
Americans are living longer, and the cost of healthcare is continuing to rise. In a 2012 article published in JAMA, founder of the Institute for Healthcare Improvement and former CMS Administrator Donald Berwick, MD, suggested one third of spending on U.S. healthcare is wasted. Value-based care and population health are ways to address the rising costs and waste in healthcare. But new approaches to healthcare delivery require new methods of managing the healthcare revenue cycle. Shifting to value-based care is mission critical for many organizations. However, making this transition isn't easy. At Becker's 5th Annual Health IT + Revenue Cycle Conference Carl Couch, MD, former vice president of innovation at Dallas-based Baylor Scott & White Health, shared insights about value-based care based on his years of leading a large accountable care organization. Jennifer Nicholson, HP2 program manager at Northeast Georgia Health System in Gainesville, discussed how analytics and bundled payments have generated better patient outcomes and cost savings for the health system. (Becker's Hospital CFO Report, November 14, 2019)

1/3 of US Payments Used Alternative Models Last Year, But Progress Stagnant
Dive Brief:

  • Nearly 36% of U.S. healthcare payments in 2018 involved alternative payment models, compared with 34% in 2017, but only 14.5% of 2018 payments included some form of downside financial risk for providers, a report released Thursday from the Health Care Payment Learning & Action Network found. The public-private partnership looked at data on 226.5 million Americans, or 77% of the covered population.
  • Fee-for-service still accounted for 39% of healthcare payments in 2018 while another quarter of payments were for fee-for-service with some link to value, such as bonuses for reporting data on quality or performance.
  • Medicare Advantage plans had the highest percentage of total payments tied to alternative payment models (53.6%), followed by traditional Medicare (40.9%), commercial payers (30.1%) and Medicaid (23.3%).

(Healthcare Dive, October 24, 2019)

A Value-Based System Where Healthcare Providers are Accountable for Outcomes Will Benefit Patients
What makes a good hospital visit? Few people might actually enjoy going to the hospital, but most can agree that a "good" visit means getting high-quality care and emerging in better health, as quickly and painlessly as possible. Unfortunately, many health systems are not designed to prioritize the type of care that patients value the most -- timely, appropriate and caring treatment that is effective yet affordable, in the hands of competent professionals who listen and respond to their needs. In "fee-for-service" models, which is how most health systems traditionally operate, healthcare providers from doctors to hospitals charge for each procedure, regardless of what the outcome may be. As payment depends on the volume of services provided, such models incentivize quantity over quality, encouraging speedy delivery at the expense of other aspects of high-quality care. Singapore has long been recognized as having one of the world's most effective and efficient healthcare systems, beating global average life expectancy by 12 years while ranking second only to Hong Kong on Bloomberg's Health Efficiency Index. However, faced with the rising demands of an ageing population and chronic diseases such as diabetes, healthcare expenditure has been growing at a rate that the Ministry of Health (MOH) describes as ultimately unsustainable. (Today Online, October 9, 2019)

Multimodality Cancer Care and Implications for Episode-Based Payments in Cancer
Most patients receiving multimodality cancer care receive care from different practices. Therefore, episode-based payments in oncology must hold multiple providers accountable for costs and quality.


  • Many patients with newly diagnosed colorectal, lung, or breast cancer receive multimodality therapy (i.e., surgery, chemotherapy, and/or radiation) within 6 months of diagnosis, and few of those patients received the different types of treatments at a single practice.
  • For bundled or episode-based payments to work in cancer care, they must be able to hold multiple distinct providers accountable for costs and quality.

Payers are increasingly using episode-based payments to reduce costs and improve quality in several areas, including joint replacements, dialysis, and hospitalizations for certain conditions. In oncology, CMS is implementing the Oncology Care Model, an episode-based alternative payment model for patients receiving chemotherapy. Other proposals for oncology episode-based payment models focus on patients with newly diagnosed cancer who may require surgery, radiation, and/or chemotherapy.

In models focused on newly diagnosed cancers, episodes are designed based on guideline-recommended treatments for patients with cancers of a certain type and stage. However, the multidisciplinary nature of cancer care creates a challenge in identifying which provider should receive the bundled payment for such episodes. When a patient with cancer receives multimodality care (i.e., surgery, radiation, and/or chemotherapy) from different practices, it may not be readily apparent which practice should be held accountable for the costs and quality of care. We examined the prevalence of multimodality care across different practices to better characterize this challenge in colorectal, lung, and breast cancer, 3 of the most frequently diagnosed cancer types.


Using Surveillance, Epidemiology, and End Results Medicare data, we identified all fee-for-service Medicare beneficiaries with newly diagnosed colorectal, lung, or breast cancer between 2012 and 2015. For each patient, we used Medicare claims from 2012 to 2016 to identify receipt of surgery, radiation, and chemotherapy within 6 months of diagnosis.

We assigned patients receiving each treatment to the practice (based on Taxpayer Identification Number [TIN]) that submitted the claims for that service in the National Claims History Physician/Supplier file (for surgery, radiation, or chemotherapy) or the Durable Medical Equipment file (for Part B--covered oral chemotherapy).

Among patients who received more than 1 treatment modality, we assessed how often the practice billing for one type of treatment (e.g., chemotherapy) was the same as the practice billing for another (ego, surgery). We considered care to be delivered by the same practice if any practice providing one type of treatment also provided another type of treatment.


Among patients newly diagnosed with any stage of colorectal, lung, or breast cancer, the proportions who received multimodality therapy within 6 months of diagnosis were 19.6%, 6.4%, and 16.5%, respectively. Few of these patients received different types of treatment at a single practice. Specifically, of all patients receiving multimodality care for colorectal, lung, and breast cancer, only 5.8%, 17.2%, and 10.7%, respectively, received all of their care from the same practice.


Episode-based payments for patients with newly diagnosed cancer offer a promising opportunity to incentivize cost-efficient and coordinated care. Such models are straightforward for cancers requiring only 1 treatment modality (e.g., stage 1 colorectal cancer, for which surgery alone is curative); however, episode-based payment models will be more complicated for patients with cancer who require multimodality care, because such care is infrequently provided by physicians billing together under the same TIN. These more complex patients are likely sicker and have higher costs than patients requiring single-modality care and may represent a real opportunity for alternative payment models to drive savings in cancer care. For episode-based payment reform to be successful in oncology, creative approaches are needed that hold multiple distinct providers accountable for costs and quality.

(American Journal of Managed Care, November 12, 2019)

Radiation Oncology Bundle Inaccurately Predicts Some Cancer Costs
A proposed bundled payment model for radiation oncology cold underestimate payments for prostate cancer, a new analysis from Avalere, finds. The healthcare consulting firm based in Washington DC, with funding by ASTRO, assessed the accuracy of the cost prediction model used for adjusting bundled payments for 17 types of cancer in the radiation oncology model. They performed this analysis using its access to 100 percent of Medicare fee-for-service (FFS) claims, under a CMS research data user agreement. Researchers found that the cost prediction model was not reliable for prostate cancer. Actual Medicare FFS payments are substantially higher, on average, than would be estimated by the prediction model, spelling trouble for providers outside of the hospital outpatient setting, they reported. (RevCycle Intelligence, November 4, 2019)

Remedy and Regence Collaborate on Innovative Member-Centered Program Using Episodes of Care
Remedy, America's leading episodes-of-care company, announced today it is partnering with Regence on an episodes-of-care program that will improve the cost and quality of care for Regence members. Through the partnership with Remedy, Regence will pay participating providers for delivering improved patient outcomes and lower costs over a patient's episode of care, which covers all the care a patient receives for a procedure or condition over a defined period of time. Regence has 2.6 million members across its health plans in Washington, Oregon, Idaho and Utah. Episodes of Care is Regence's first value-based program to focus on clinical procedures. "We are looking holistically at all the care a member needs to treat a procedure or condition," said Kristie Putnam, vice president of provider partnership innovation at Regence. "Think of a knee replacement. Traditionally, each component of care, from diagnostic studies to surgery and rehab, was treated as an isolated event. This often led to fragmented and more costly care. Under Episodes of Care, we reward providers for delivering a coordinated experience of care that leads to improved outcomes, cost and patient experience." (PR Newswire, November 18, 2019)

State-of-the-Union Report: A Look Into The Evolving Value-Based Payment Models

As a new decade approaches, payment models are continuing to evolve to meet both clinical and financial goals for payers, patients, and providers. Pioneering in the field of advanced payment models is crucial for organizations to tap into the right opportunities.

In this report, we have analyzed multiple APMs most responsible for driving the value-based landscape of the US. Major highlights of the report include:

  • An analysis of growing payment models
  • The clinical and financial aspects of delivering care with each model.

Bundled Payment Update e-Newsletter is one of a family of free e-Newsletters providing a complimentary video presentation and regularly updated news and key resources on major health care issues such as ACOs, patient safety, pay for performance, comparative effectiveness, readmissions, and Medicaid. To view and subscribe to other e-Newsletters go to www.HealthCareeNewsletters.com.

Welcome and Comments on the Policy and Politics of Value-based Care

Susan Dentzer
Visiting Fellow, Duke-Margolis Center for Health Policy, Former Editor in Chief, Health Affairs, Former Health Correspondent, PBS NewsHour, Washington, DC (Chair)