6 Steps to Bundled Payment Success: Preferred Provider Network Development

6 Steps to Success in Bundled Payment Programs Episode initiators of bundled payment programs have the main goal of improving quality and reducing costs through better care coordination when patients are in the hospital and after they are discharged. The most significant opportunities for improving quality and reducing costs occur after patients are discharged from the hospital. An effective strategy to manage post-acute care more effectively is to engage in meaningful collaboration with post-acute care providers that are similarly committed to these goals. Below are the four steps that we use to help develop preferred provider networks for our clients as well as for ourselves.

Step 1: Provider Data Analysis – The first step in the process starts with analyzing claims data to identify a list of post-acute care providers that were utilized in the past. We then focus on a few key metrics such as volume, length of stay, readmission rate, Medicare’s Star Rating System, and collaboration effort. While some metrics can be found through claims, others are gathered by interviewing care coordination and discharge planning team members. The data is used to prioritize the list of providers.

Step 2: Provider Selection – After the provider data is analyzed and the list is prioritized, it’s time to start thinking about a provider selection process. Some episode initiators we’ve worked with developed detailed preferred provider RFPs and distributed them broadly to their preferred providers. Other episode initiators used the data coupled with an assessment of how collaborative each provider historically has been to select their preferred providers. We’ve found that the RFP process can be very time-consuming, especially during the evaluation phase. Also, the data gathered through the RFP can be inconsistent since it’s self-reported. We’ve had better success preselecting our preferred providers.

Step 3: Establish Formal Relationships – Some of the episode initiators we’ve worked with have used formal contracts while others have used memorandums of understanding that highlight the expectations of all parties. We’ve found that the best way to establish formal preferred provider relationships is to first set expectations through conversations. We then use a memorandum of understanding to outline the key responsibilities of all parties.

Step 4: Ongoing Discussions – We’ve found that starting a collaborative preferred provider relationship starts with education. Having conversations with providers about the data findings can be very helpful in learning more about the root causes of outlier cases. Educating each other about reimbursement methodologies and billing processes has helped all parties better understand the timing of claims and the billing codes that are used. We routinely share data with our preferred providers and vice versa.

Our preferred providers have been given the opportunity to shine and to show us what they do best. By developing tighter, more formal collaborative relationships with high-quality and cost effective preferred providers, we’ve seen quality and patient outcomes increase while costs have decreased. If you’d like to learn more about our preferred provider network process, please let us know.