Under the Arch—Archway’s Bundled Payment Musings

It’s been a busy few weeks of travel, conferences, and customer visits for the Archway team. We thought we’d share some of what we’re seeing and learning in the bundled payment market. Post Acute Link Conference, Chicago

post acute link

Dave Terry helped lead the kick-off panel on bundled payments at Lincoln Healthcare’s Post Acute Link Conference on Wednesday, June 8th. The theme of the conference was value-based care in the post-acute setting. This was Lincoln’s biggest conference ever with over 600 people in attendance.

Below are a few observations that Dave and Ben Gardner, Archway’s SVP of Sales & Marketing, took away from the conference:

  • There is more urgency and angst among skilled nursing facilities (SNFs) about bundled payments and Medicare risk programs than within the hospital community. SNFs understand that the CJR program will quickly and dramatically reduce joint admissions and length of stay and they are trying to figure out how to respond. Hospitals, meanwhile, have been much slower to develop their CJR strategies, probably because there is no program downside in 2016.
  • Preferred provider partnerships have not been that impactful for most SNFs. To date these processes have taken a lot of time and effort, but they have generally not led to more referrals. This may be because most joint replacement patients are now going straight to home, with or without home health, and bypassing SNFs. In Archway’s experience SNF days for BPCI major joint patients have dropped by up to 75%.
  • In order to respond SNFs are starting to develop comprehensive payment reform strategic plans that go beyond preferred provider partnerships. Key questions SNFs are considering in the strategic planning process include:
    • How quickly is my market moving toward risk?
    • What will this mean for the number of SNF days in my market over the next 1 to 3 years?
    • What types of patients will and won’t use my services going forward?
    • What are our internal care management capabilities?
    • What are our 90 day episodic costs and how can we effectively manage those costs?
    • How quickly should we be lowering our length of stay?
  • Continuing Care Retirement Communities (CCRCs) are also thinking through their payment reform strategies, with some of the larger players considering entering into innovative care and risk management contracts with Medicare Advantage plans and Accountable Care Organizations. This can be a very interesting and potentially lucrative strategy for CCRCs with effective care management tools and infrastructure.

The National Bundled Payment Summit, Washington DC

Archway Booth copy smaller

Archway unveiled its new conference booth at the National Bundled Payment Summit, which was attended by four members of the Archway team–Mike Fazio; Ed Bassin, Ph.D.; Maureen Thompson, RN; and Ed Hughes, the newest member of our sales team.

  • The biggest takeaways from the Summit came from presentations by Patrick Conway and Amy Bassano, leaders of the CMS and CMMI teams. These presentations reiterated CMS’s commitment to value-based payment. Both presenters indicated that CMMI would continue rolling out new programs in both bundled payments and accountable care in the months and years ahead. We have included a link to Patrick Conway’s presentation here: CMS Perspective on Payment Reform.
  • In her remarks Amy Bassano mentioned that more bundled payment programs, including a next generation BPCI program, will be coming soon and will be developed based on what CMMI has learned from the BPCI and CJR experiences. While many people have been concerned that CJR is the template for all future bundled payment programs, Bassano and other CMMI speakers indicated otherwise. We should expect to see both voluntary and mandatory programs, and programs with different provider types as episode initiators. CMMI leadership pointed out that bundled payment programs for physicians are needed to meet the Advanced Alternative Payment Methodology requirements in MACRA.

The CEO/Innovators Roundtable, Boston

ceo:innovators roundtable

On Friday, June 10th, Dave Terry participated in a bundled payment panel discussion with Bill Kramer, from the Pacific Business Group on Health (PBGH), and Sunny Ramchandani, MD, from Aetna. The conference was created by Russell Reynolds, BDC Advisors, and Foley & Lardner.

It was a lively discussion that focused on three key questions:

  •      Are providers ready for bundles?
  •      Are bundles an end point or step along the way toward global risk?
  •      Will the value trend continue?

Below is our perspective on how these questions were answered:

  •      Are providers ready for bundles?

The general viewpoint was that providers are pretty unprepared to fully understand and implement bundled payment programs. This is also true for payors and self-insured employers. The Archway view on this is that bundled payment programs are much simpler and easier to manage than is generally understood, and definitely much more straightforward than global cap programs. They are also much more effective at improving care and generating savings, in our experience. Aetna and PBGH shared the view that they would like to see more bundled payment activity in the market, but that providers, plans, and employers all need help getting started.

  •      Are bundles an end point or step along the way toward global risk?

There has been some controversy and confusion about whether the best way for providers to drive change is to pursue ACO’s or bundles. This group concluded that the answers is more of an AND than an OR. Developing bundle payment contracts, or at least bundle-driven specialist compensation models, within an ACO structure is a very effective way to engage specialists, drive innovation, and reduce costs. Without a model like this specialists end up getting paid fee-for-service, which creates a huge gap in the move toward value as specialists control the vast majority of medical spending and care for the patients with the most immediate and resource-intensive healthcare needs.

  •      Will the value trend continue?

The group agreed that both the economy and the Affordable Care Act will continue to drive the healthcare market toward value, regardless of who occupies the White House next year. It was also mentioned that Medicare’s bundled payment initiatives are highly regarded by politicians and regulators from both sides of the aisle.

Customer Visits in California

Ben and Dave spent the early part of this week in Northern California meeting with a few CJR customers and channel partners. A few observations from the West Coast:

  • The CJR market is still moving slowly. Hospitals seem to know they need to do something, but a few factors are dragging out their processes. These include:
    • Lack of urgency. Either because there is no downside until 2017 or because they are already “in the money” on their CJR prices, most hospitals haven’t developed a budget or specific program goals and targets yet.
    • Vendor overload. Everyone we have talked to has been inundated with vendors who want to help them with their CJR programs.
    • C-suite anxiety. Despite this initial slow movement we are picking up increasing anxiety from the C-suite. CJR came on the radar very quickly and it hasn’t hit the hospital’s top tier priority list yet, but senior hospital executives know that this is just the beginning. CMS has indicated that a cardiac version of CJR is coming soon, and there are increasing rumblings about commercial bundled payment contracts as well. There are also concerns that if a hospital doesn’t have a competitive gainsharing program with their surgeons they are at risk of losing share to other hospitals in their market that do.

Please send us any thoughts or comments you have on what we’re posting. We’d love to hear from you.