Cancellation of Mandatory Bundles Paves the Way for Voluntary Success

This week, the Centers for Medicare & Medicaid Services (CMS) announced it will cancel its mandatory cardiac and orthopedic Episode Payment Models (EPM), in addition to scaling back the Comprehensive Care for Joint Replacement (CJR) model. While the news has left some questioning the future of value-based care, the cancellation of these mandatory bundled payment programs is a favorable indication of the future of voluntary reimbursement programs.   The recent cancellation of mandatory bundles has been brewing for some time. Prior to the cancellations, Tom Price, Secretary of the U.S. Department of Health and Human Services delayed the effective start date of EPM, and openly criticized the mandated programs. And while it may seem that bundled payments have been through the fire in just a few short days, two voluntary models that have seen much success among providers have emerged unscathed: Bundled Payments for Care Improvement (BPCI) initiative and Oncology Care Model (OCM).

Even when mandated programs were in place, hospitals and other stakeholders were pressing for voluntary initiatives. Results from the voluntary programs have shown greater engagement and increased savings among providers who are eager to improve quality and reduce costs in a pressured healthcare environment. As success of the voluntary models continues, we expect the adoption of these programs will only continue to grow.

At Archway, we have a rather unique opinion on the recent news and the mandatory versus voluntary debate. As a bundled payment company, one would likely assume we are in favor of mandatory bundled payment participation. In fact, we believe the best approach for bundled payment programs is to allow voluntary participation.

While we were initially excited about the CJR and EPM programs that included mandatory participation for certain areas and hospitals, we have concluded over the past two years that voluntary programs will have a bigger and more rapid impact on the shift from volume to value.

Even better news in the announcement this week is the clear indication that CMS is moving full speed ahead with a new voluntary bundled payment program that will allow hospitals, specialists and post-acute providers to serve as Episode Initiators. We view this as a very positive development for providers who missed the last voluntary open enrollment period in early 2014.  This program will also enable CMS to offer an opportunity for specialists to participate in a MACRA qualifying Advanced Alternative Payment Model (APM) in 2018.

As CMS prepares to launch the next generation of BPCI in the coming weeks, we’ve actively advocated for the program to be voluntary. There are three main reasons why we believe voluntary bundled payment programs will be more successful in this transition:

The first is the willingness of providers to commit to payment reform. Because they have signed up, provider organizations participating in the voluntary programs are more engaged and motivated to change processes, improve care, and reduce costs. As a result, the improvements are more significant and the adoption occurs more rapidly.

The second is that voluntary programs don’t have to appeal to all providers. In order to make mandatory programs palatable to reluctant participants, the rules tend to be watered down compared to the rules within the voluntary programs. As a result, there is less urgency to change behavior, and the improvements in care and cost are not as substantial.

Finally, we have seen many specialty groups, hospitals and post-acute providers achieve significant success in these voluntary initiatives.  In the programs we have helped manage, we have seen outcomes improve, patients return home faster, and significant savings earned by both CMS and the Episode Initiating providers.

Even in losing these mandatory bundled payment programs, CMS continues to push the industry toward value. By having voluntary participants show the benefits and significant improvements from bundle payment programs, more providers will eventually want to participate, and we are confident we will see a more impactful shift in payment reform.

Announcing a Brand New Redesign for Carelink

We are proud to announce that Carelink has gotten a brand new redesign. Our web development team has been working hard to improve Carelink's user interface to make it even easier for bundled payment episode initiators and other providers to track their patients throughout an episode of care. Here are some highlights of the new design:

  • Episode List The Episode List is the master list of all the patients you are tracking. Use the filters at the top of the page to focus on all admitted patients, patients that need to be admitted, patients that need to be discharged, or patients that need a status update. You can see the bundle, care plan, last status update, and any red flags for each patient on this page.

  • Dashboard The Dashboard is where you can see your bundled payment program overview at a glance. New visualizations present the information in an eye-catching way and patient details help you immediately identify which patients need urgent attention.

  • Patient Details The Patient Details page has been reorganized to help you focus quickly on key information. The care plan is now represented by a timeline chart and the latest status updates will appear at the top of the patient's episode history.

  • Reports Use reports to monitor preferred provider performance, track SNF LOS trends, access a financial summary, and more.

If you are a Carelink user, log in to www.archwaycarelink.com and click "Try new design" in the header to see for yourself! We would love to hear what you think of it. Please let us know if you have any comments or questions.

Contact us for a demo here.

2016 Review and 2017 Preview

The Year in Bundled Payment – Top 2016 Events While the activity and buzz in the bundled payment world continues to grow, 2016 was what we consider an “in-between year” in the market. In 2015 we saw the vast majority of the Bundled Payment for Care Improvement providers go live. And in 2017 we expect CMS to launch the Advanced BPCI program, as well as to see significant growth in the commercial market for bundled payments.

Despite 2016 being marked between two years of significant progress in bundled payment market, a number of key events, industry trends and new value-based payment models make this “in-between” year worth recounting.

To recap bundled payments for 2016, we’ve compiled a list of key milestones; a preview of 2017 will follow this article.

  1. President Trump. Our list begins like every list of big events in 2016 with the election of Donald Trump as our 45th president. In the short term, we see a pause in CMMI value-based activity as the new administration gets settled. However, our longer-term view is that the Trump/Price era will drive significant growth in bundled payments in both the commercial and governmental payer markets.
  2. The Initiation of the Oncology Care Model. On July 1st CMS launched the Oncology Care Model (OCM). At the time, OCM was below the radar because it began as an “upside-only” initiative, but OCM represented the most significant growth in bundled payment participation in 2016 with 196 cancer care providers and 17 health plans participating. OCM participants have quickly adopted the changes required to succeed within the program as it covers as many as 50% of the patients in an oncology practice, and it is one of the first models that qualifies as a specialist driven Alternative Payment Model (APM) within MACRA. https://innovation.cms.gov/initiatives/Oncology-Care/
  3. The Comprehensive Care for Joint Replacement (CJR) Program Fell Flat. The bundled payment community was initially very excited about the CJR program when it was announced in 2015, but few participating hospitals have embraced the initiative. CJR is the first mandatory program and it requires more than 750 hospitals in 67 markets to participate in a bundled payment initiative for joint replacement patients. From what we’ve seen in the market, most hospitals, with a few exceptions, have done little to change and improve their processes for joint replacement. This is true for several reasons: there is no downside risk in year one of the program, there remains resentment over the mandate, there is limited gainsharing opportunity for surgeons, and now many are anticipating that the program may be changed or dropped by Rep. Tom Price and the incoming team at CMS, among others. https://innovation.cms.gov/initiatives/cjr
  4. Bundled Payment for Care Improvement (BPCI) Reconciliations. Most of the 1,350 providers in the BPCI program reconciled for the first time in early 2016. While the data has not been released by CMS, our informal market survey indicates that most hospitals in the program have earned savings, as have skilled nursing facilities (SNFs) with sizable programs. In our experience, some hospital systems are earning hundreds of thousands of dollars per quarter. Most participating home health agencies and SNFs with sub-scale programs have struggled. The Physician Group Practice (PGP) market has been mixed. Many orthopedic groups have earned significant savings, but hospitalist programs have been hampered by major patient attribution issues, causing CMS to forgive downside for PGP participants for most of 2015 and 2016. These problems have cast doubt on the hospitalist-driven bundled payment model going forward, creating the expectation that the Advanced BPCI model will be more oriented toward traditional specialists. In the third quarter of 2016, CMS and Lewin released their Year 2 BPCI Evaluation and Monitoring Report, but the findings are limited due to a small set of participants in the program in 2014 as most providers didn’t go live until 2015. https://innovation.cms.gov/Files/reports/bpci-models2-4-yr2evalrpt.pdf
  5. General Electric (GE) Bundled Payment Activity. In 2016, GE emerged as a major player in the commercial self-insured bundled payment market. Currently, they have developed maternity and orthopedic bundles in Cincinnati and Boston, and have made inquiries about developing cancer bundles in partnership with high-quality, innovative oncology providers. GE appears to be following in the footsteps of CMS and helping to serve as a catalyst for creating momentum in the commercial bundled payment market. https://www.bostonglobe.com/business/2016/12/19/cuts-unusual-deal-with-new-england-baptist/FqKBq03AB4UuQWQqEzvbgI/story.html
  6. PwC Strategy & Bundled Payment Survey. In their annual bundled payment survey, PwC found that the general public doesn’t find bundled care programs hard to understand once explained, and 80% of consumers favored the bundled model over fee-for-service. Despite this consumer demand, only 31% of hospitals and 20% of employers have adopted the model. We believe this indicates there is significant pent-up demand for growth in the bundled payment market. http://www.strategyand.pwc.com/media/file/Annual-Bundles-Survey-2015-2016-Results.pdf
  7. Episode Payment Model (EPM) Final Rule. Just before the end of 2016, CMS published the final rule for the EPM program, which is essentially a mandatory hospital bundled payment program for AMI and CABG patients, as well as an expansion of the CJR program. There was some uncertainty about whether the Obama CMS team would move ahead with the EPM program given Rep. Price’s stated opposition to these mandatory programs. By moving ahead with EPM, while abandoning changes to Part B drug pricing, it seems clear that the current CMS team believes strongly in the performance and potential of bundled payment programs.
  8. Wait and See Approach in the Private Equity Market. In 2015, numerous bundled payment companies, including Archway Health, received investments from a variety of industry sources including Bain Capital, Cardinal Health, and Coverys. In 2016, the private equity community took a wait and see approach. This phenomenon, driven be several factors, is the result of no new open window periods in the BPCI program, limited downside risk and no convener role in the CJR, EPM and OCM programs, and lack of visibility on BPCI performance due to the PGP attribution issues described above. In addition, each of the major bundled payment players has taken different approaches to growth and success in the market. PE players appear to be watching this play out a bit before placing their bets. We expect winners and losers to emerge in 2017, which should start to open up the investment market.

For being an “in-between year,” there are a number of activities that influenced the bundled payment market in 2016. We welcome your input and feedback, and encourage you to read our predictions for 2017.


Bundled Payments in 2017 – What to Expect

If 2016 was a year of progress in the bundled payment market, 2017 is anticipated to be a year of growth. With more pressure to reduce costs and more opportunity to advance value-based payment with bundled contracts, we expect 2017 to be a big year for bundled payments.

Here are a few of our predictions for the bundled payment market in the year ahead:

  1. Trump/Price Help Drive Bundled Payment Growth. While there is a great deal of uncertainty surrounding the goals and priorities of the Trump administration, it is clear that government spending and regulation will be reduced in favor of more market-based solutions. In addition, there will be increased pressure for payers to lower health insurance premium growth and for providers to lower costs. These pressures will push commercial payers and self-insured employers to build on the success Medicare has had with bundled payment initiatives. We also expect Medicare to significantly expand their voluntary bundled payment programs. Medicaid bundled payment programs will also start to grow as CMS moves toward block grants, which will increase state flexibility while also creating more pressure to reduce costs.
  2. Advanced Bundled Payment for Care Improvement (BPCI) Program Will Greatly Impact Growth of Bundled Payments. Earlier this year CMS announced that they will be rolling out the Advanced BPCI program, a voluntary bundled payment initiative that will build on the current BPCI demonstration. Our expectation is that CMS will announce the Advanced BPCI program in the first half of 2017 with an anticipated start date in early 2018. Importantly, a major goal of the Advanced BPCI program will be to create physician-driven two-sided risk structures that qualify as Advanced Alternative Payment Models (APMs) within the MACRA legislation. Essentially, an Advanced APM is either an ACO for primary care physicians or a bundled payment model for specialists. This will be a huge deal in the bundled payment market, as it will create new opportunities for orthopedic surgeons, oncologists, cardiologists, urologists, gastroenterologists, and others to gain greater autonomy over their care process, improve quality, reduce costs, and earn new revenue through participating in bundled payment programs. With the addition of the Advanced BPCI program, bundled payments are going to grow.
  3. The Comprehensive for Care Improvement (CJR) and Episode Payment Model (EPM) Programs Shift from Mandatory to Voluntary. Representative Tom Price has been very vocal in his opposition to the mandatory aspects of the CJR and EPM programs. While there is a chance that as head of HHS Secretary Price will eliminate these programs, we expect them to continue as voluntary initiatives. By keeping these programs in place, CMS can utilize CJR and EPM as Advanced APMs within MACRA, as well as enable participating hospitals to build on the process improvements and infrastructure investments they have already made.
  4. Growth Will Accelerate in Commercial Bundled Payment Programs – The Buy Side. In the second half of 2016 bundled payment activity among commercial health plans and self-insured employers picked up considerably. Key events included United Healthcare announcing the national expansion of their joint replacement program, GE expanding their joint and maternity programs, and a number of plans exploring partnerships to develop and manage their bundled payment initiatives. In 2017, we expect this activity to accelerate considerably with more plans and employers developing bundle contracts, building provider networks and launching programs.  
  5. Growth Will Accelerate in Commercial Bundled Payment Programs – The Supply Side. As interest and momentum build in commercial bundled payment programs, we anticipate specialists will respond by developing value-oriented specialty networks that can manage within a bundled payment contract. Unlike current, scale-driven health systems, these new networks will consist of high-quality specialists who can that deliver high-quality outcomes for a guaranteed price. These new networks will be unique in that high-volume, independent groups will have the potential to outperform large systems, and they will be able to sell their services to all types of buyers, including health plans, employers, ACOs, and unions, among others, in targeted bundled payment contracts.
  6. BPCI Convener Contracts Are Expiring and New Opportunities Will Emerge. The BPCI program was initially supposed to be a three-year initiative, starting in late 2013 and ending in 2016. It has now been extended through Q3 of 2018, but many of the early contracts providers signed with their conveners had a three-year term. As a result, many of the early BPCI providers may have the option to either switch conveners or become their own BPCI convener starting this year. We would not be surprised to see some of the larger Model 2 hospital systems, orthopedic groups, and Model 3 SNF networks evaluate their convener options and opportunities in 2017.

While many areas of healthcare remain uncertain, we‘re confident that bundled payments will only continue to grow in the coming year.

If you have questions on any upcoming bundled payment initiatives or industry trends, please contact us at info@archwayha.com

“Get Ready for the Comprehensive Joint Replacement Program—The Time Is Now” Webinar Recap

Last Friday Archway Health hosted a joint webinar with Foley & Lardner LLP titled “Get Ready for the Comprehensive Joint Replacement Program—The Time Is Now.” The webinar is part of a Bundled Payment Best Practices webinar series. Presenters:

You can find a video replay of the webinar and a copy of the slides here.

Here’s our recap:

First, Foley & Lardner presented an overview of CJR. In the CJR model, “acute care hospitals in certain selected geographic areas will be responsible for the costs of episode of care for extremity joint replacement or reattachment of a lower extremity (and, as proposed, surgical hip/femur fracture).” The episode of care “covers all Medicare Part A and Part B payments from hospitalization through 90 days post-discharge.”

The CJR program began on April 1, 2016 and is already mandatory for around 800 hospitals in 67 metropolitan statistical areas. The financial model for CJR is a retrospective, two-sided risk model where hospitals bear financial responsibility. At the end of each performance year, “actual episode spending will be compared to the episode target price.” Once this comparison is made, the hospital will receive reconciliation payments if their costs were below target and they will be responsible to repay CMS if their costs were above target. CMS sets these target prices based on historical data. Downside risk will begin on January 1, 2017. CJR is scheduled to be a five-year program.

In the webinar, Foley & Lardner went into detail on how target prices are established and discussed rules governing sharing agreements. They also talked about program waivers for CJR, including some that we have seen in other CMS programs.

After introducing Archway Health and our holistic approach to bundled payment, Dave Terry then gave insight into bundled payment program design and the current state of the bundled payment market. It is clear that bundled payment is no longer a niche payment model, but rather, an important priority in provider strategy. For one thing, CMS continues to push bundled payment models forward. Another sign of the continuing growth of bundled payment is that employers are starting to ask for it. Bundled payment is not going away. It is already starting to change the way that providers get paid.

The Archway approach to CJR is a three-phase process of preparation, design, and implementation.

Phase 1 is Program Preparation. The main objective of this phase is to identify the priority areas of focus. To do this, we run analysis on episodic spending by surgeon and by post-acute provider, quality performance, and pricing to identify key areas of opportunity. One mistake that providers make is trying to do everything at once. Instead, providers should let the data guide them to one or two areas to select as areas of focus.

Once the areas of focus have been identified, it’s time to build one really good team, not multiple teams, to work on that area. That’s why Phase 2 is Program Design. The main objective of this phase is to finalize the CJR strategy and operational plan. During this phase, the practice will designate and train a CJR Oversight Team. This team will carry out the work plan that will be defined during this phase. Key team members may include joint class leaders, a care management leader, a discharge planning leader, a surgeon champion, and representatives from the financial department and C-suite. The practice will also develop a gainsharing strategy and formalize a preferred provider network.

Phase 3 is Program Implementation. Though preparing and designing the program lays the foundation, we spend the most time in the actual implementation. The main objective is to improve quality and reduce costs. Implementation involves ongoing learning and improvement. Identifying and tracking CJR patients is an important part of program implementation. At Archway, we have developed a care management model called the INACT process. We also make patient tracking and financial performance available on an online platform.

Are you preparing for CJR? To learn more about Archway’s three-phase CJR model implementation plan, please contact us at info@archwayha.com.

Register for a CJR Webinar This Friday with Archway Health and Foley & Lardner LLP

This Friday Archway Health is hosting a joint webinar with Foley & Lardner LLP on preparing for CJR. This webinar is part of a Bundled Payment Best Practices webinar series. Get Ready for CJR — The Time is Now

When: Friday, September 9, 2016, 1:00 p.m. to 2:00 p.m. EST


Here is the announcement from Foley & Lardner LLP:

foley logoApproximately 800 hospitals in nearly 70 U.S. metropolitan statistical areas must now comply with the Center for Medicare and Medicaid Services’ Comprehensive Care for Joint Replacement (CJR) model. The potential for downside risk to your facility starts on January 1, 2017.

This model requires that you plan and implement a combined physician/post-acute care strategy and network of collaborators to share gains and losses for the 90-day post-discharge period of at-risk patient care. It also reflects a growing and significant trend toward bundled payment reimbursement models.

With that in mind, now is the time to learn how you can implement a winning CJR strategy at the fourth session in our Bundled Payment Best Practices webinar series. Our speakers will show you how to employ CJR, by phase, within your organization.

Plus, this webinar will include:

  • A brief overview of the CJR model
  • A three-phase CJR model implementation plan
  • A roundtable discussing the points of interest for hospitals and other health care providers


Dave Terry, CEO, Archway Health Christopher Donovan, Partner, Foley & Lardner LLP C. Frederick Geilfuss II, Partner, Foley & Lardner LLP

There is no cost to participate in this program, but advance registration is required. To participate, please use either the Register Today button above or below, or simply register here.

Instructions for accessing the program will be included in the registration confirmation.

For more information, please contact David Puleo at dpuleo@foley.com.