Why bundled payment models should stay mandatory

HHS Secretary Tom Price and CMS Administrator Seema Verma have both expressed skepticism about making bundled payments mandatory for providers in certain regions, but switching them to voluntary participation could slow the transition to value-based care, according to five Brookings Institution experts writing in a Health Affairs blog post.

Tim Gronniger, Matthew Fiedler, Kavita Patel, Loren Adler and Paul Ginsburg argued Price and Verma can make useful changes to the bundles “without damaging the integrity of these models,” like what role hospitals will play. Moving away from mandatory participation, however, would go too far.

“Making these models optional would eliminate the ability to generate robust evidence on their effectiveness, dealing a severe blow to efforts to use bundled payments to improve care delivery in orthopedics and cardiac care, and to the chances for bringing bundled payments to scale nationally in the coming years,” the experts wrote.

CMS has already delayed the start of its cardiac care bundled models from July to October after Verma was confirmed. According to the Brookings experts, those mandatory models are a necessary evolution to properly assess whether bundles can be used on a national level in Medicare.

“Mandatory approaches also facilitate the use of model designs that have potential to drive larger improvements in the efficiency of care,” they wrote. “In particular, there is a strong rationale for setting common spending benchmarks for all providers in a geographic area based on the area’s average costs historically. Setting common benchmarks creates a level playing field across providers and allows market forces to drive market share to the most efficient providers, a potential source of major cost savings.”

Beyond the reasons not to roll back the mandatory bundles, the authors also argued CMS would have a difficult time doing so. For instance, CMS could reduce of the number of markets involved, but the Brookings expert say the models are already near the minimum needed for an effective evaluation.

If Price and Verma insist on changes, the authors recommend making the mandatory models less “hospital-centric,” and allow physicians to take on more financial risk. One option they discussed is creating a “virtual bundle,” spreading responsibility to all participants in an episode of care in proportion to the portion of a care they provide.

“The overall payment associated with an episode would not change; the only difference would be in how that payment is allocated among providers,” the Brookings experts wrote. “As a result, it is possible that providers would negotiate similar agreements with one another under either structure, leading to similar outcomes. However, it is also possible that this approach would create confusion about who is accountable for the outcome of any given patient, undermining efforts to change practice patterns, particularly since it would arguably attenuate incentives for providers most able to affect outcomes.”