Reports of Bundled Payments' Death Have Been Greatly Exaggerated

The recent proposal by the Centers for Medicare & Medicaid Services to cancel its Episode Payment Model and to roll back the Comprehensive Care for Joint Replacement program is consistent with the Trump administration’s attitude toward bundled payments. It is well-known, for example, that Health and Human Services Secretary Tom Price is an opponent of mandatory programs like the EPM and CJR models. At first glance, this move to step away from two huge bundled payment programs may appear to be a strike against the payment model altogether and signal a reversal from the years-long movement by CMS towards bigger and better alternative payment models. But it’s important to put the announcement into context. Doing so paints a different and not-so-doom-inducing picture of the future of Medicare payment reform.

Consider, for example, the fact that while Price has been an outspoken opponent of mandatory models, he has expressed support for voluntary bundled payments in the past. His vote in favor of the Medicare Access and CHIP Reauthorization Act of 2015--of which APMs are a cornerstone--while serving in Congress is often cited as evidence of his favorable stance on payment reform. But what is cited much less often, if at all, is his support for the voluntary Bundled Payments for Care Improvement initiative, a program that he said he supported during his confirmation hearing in January 2017. This information leads one to think that CMS will continue to produce bundled payment models, just not mandatory ones.

As a matter of fact, that is exactly what is occurring. Several news outlets covering the CMS announcement have failed to acknowledge the next bundled payment program coming down the CMS pipeline: BPCI Advanced. That model, as its name implies, will be the next iteration of the BPCI following that program’s end in September 2018. Episodes that were included in EPM, including coronary artery bypass grafting surgery and acute myocardial infarction episodes, will likely appear in BPCI Advanced. Because BPCI Advanced will be voluntary, such a move would essentially retain the agency’s desire to create bundles for cardiovascular episodes, just on a play-at-your-own-pace basis. BPCI Advanced will also qualify as an Advanced Alternative Payment Model under MACRA and offer participating providers a 5 percent bonus on their Medicare payments. While the new program would not ensure a sizable participant pool the way a mandatory program would, the potential for savings and bonuses should entice a substantial cohort of providers to join.

Speaking of MACRA, two of the law’s critical components tied to payment reform, the Merit-Based Incentive Payment System and Advanced Alternative Payment Model track, have so far overshadowed a very promising entity created by the law: the Physician-Focused Payment Model Technical Advisory Committee, or PTAC. This 11-person board evaluates and recommends to the HHS Secretary alternative payment models developed by physicians. PTAC offers a promising avenue for developing bundled payments through a collaborative, bottom-up approach. One large bundled payment program, the American College of Surgeons-Brandeis Episodes of Care model, is already making its way through the committee and has been recommended for limited-scale testing.

Don’t sign the death warrant on bundled payments just yet. The payment model is certainly in a transition stage, but by no means is it on life support. While CMS will move away from mandatory bundles under the current administration, new opportunities for participation will open up in Medicare, and with PTAC now playing a role the future appears promising. The question is not if, but when.

Follow Tyler Dinwiddie on Twitter, @TylerDinwiddDRG.