Dr. Chad Ellimoottil is a Clinical Lecturer and Postdoctoral Fellow at the University of Michigan.

Vinay Guduguntla

Vinay Guduguntla is a medical student at the University of Michigan and a Research Assistant with the MVC.

MVC had the opportunity to attend the 2016 National Bundled Payment Summit in Washington, DC. The annual Summit brings together individuals from academia, health systems, payers and industry to discuss the future of episode-based payment measures and bundled payments.  


Takeaway 1:  There are many unknowns. There are so many models out there, each with different guidelines and metrics. After listening to the Q&A sessions from CMS and large private payers, it is clear that bundling is a far from perfect science.

Takeaway 2: Addressing knowledge gaps in bundled payments is a priority. While we are in our second iteration of bundled payments, there is still much to consider regarding program development. A common topic was the level and appropriateness of data granularity (e.g. cancer staging). Specifically, the inclusion of patient-reported outcomes for quality measurement, incorporation of drug costs, and condition vs. procedure specific bundling were discussed. 

Takeaway 3: Start slowly. If you are a health system, do not be too disruptive when initiating a bundled payment program – one-sided risk is not that bad. It is nice to have initially as you work out the kinks of the model.   

Takeaway 4: Invest resources into care transformation that can scale. Future bundles are coming from both CMS and private payers, so it is important to have processes that are not tied to a specific reimbursement program (e.g., Comprehensive Care for Joint Replacement, Bundled Payments for Care Improvement). Many health systems and physician groups are planning for future bundles by developing bundles that are multi-state and multi-payer.

Takeaway 5: Care standardization is necessary for success. Consulting companies will spend hours with physicians understanding their practice patterns to reduce variation (e.g., who do physicians send to a SNF and why?).  In addition, health systems like Mount Sinai create clinical pathways that reflect best practices.

Takeaway 6: Physician engagement is key.  This message was echoed throughout the conference. When implementing a new bundle, make sure to start with a clinical department that is engaged.  Then, focus on building new workflows into current practice (i.e., use Epic). Change is not easy, though, and framing the situation is vital. At the Summit, Mount Sinai discussed using principles of behavioral economics to adjust physician behavior.  For example, people have “loss aversion”, or the strong tendency to prefer avoiding losses than acquiring gains, so it is better to highlight incentives as “lost money”. Unblinding data is also effective because it increases transparency and accountability.

Takeaway 7: Employer-led bundled payments is a rapidly growing area. Employers need to reduce healthcare costs, and are attracted to bundled payments. However, many employers lack the expertise to develop and implement bundled payments. For this reason, physician organizations (e.g., North Carolina Orthopedics) and institutions (e.g., Northwestern) rely on the payer or broker (e.g. Pacific Business Group on Health) to create a bundled payment programs. These programs have greater focus on consistent high quality service instead of dramatically lower costs. Overall, employers are taking a cautious “test the waters” strategy by trialing pilots of narrow networks rather than going all-in from the start. Walmart is arguably the best example of employer-led bundled payments.

Takeaway 8: Providers are approaching insurance companies with bundles.  CIGNA now has over 50 bundled payment arrangements in various states for various conditions. Blue Cross Blue Shield New Jersey (BCBSNJ) has reported the same.  These payers work closely with providers and other payers in the state to discuss the construction of the episode.

Takeaway 9: Pay attention to Arkansas state-wide bundled payment programs and Blue Cross Blue Shield New Jersey (BCBSNJ)[1].  Arkansas has state-wide, multi-payer mandatory bundled payments for multiple conditions.  As a result, Blue Cross of Arkansas has seen millions in savings. They have bundles for joint replacement, c-section, heart failure, and other conditions. BCBSNJ has showed similar success in this area, and has lots of experience with bundles. More information here on AR and NJ.

Takeaway 10: There are many companies in the bundled payment and episode cost analytic space. Venders are very willing to talk to hospitals about how their products can help administrators improve data collection.

[1] http://healthaffairs.org/blog/2014/06/02/bundled-payments-moving-from-pilots-to-programs/