What Happens if CAD is Bundled?

Thursday, June 2, 2016 | Larry Sobal

 

In my blog post last week, You're Probably Not Ready for this Health Care Change, I wrote about the recent HCP-LAN white paper that is proposing a one-year bundled payment related to Coronary Artery Disease (CAD). In the past week, many people have asked me what I think will happen if CMS or other payers adopt this approach. Here’s what I think.

This is clearly a case where “the devil is in the details.” Although the white paper offered a combination of some specific ideas (e.g. the one year bundled period would coincide with a benefit plan year, not triggered by the date of the diagnosis), along with some open minded ideas (e.g. it may not be of value to include all CAD patients in the bundle), it leaves a lot open for interpretation and eventual implementation.

However, make no mistake that the intent of the CAD Bundle ideas promoted in the white paper have some specific goals in mind:

• Increasing the rate of provision of the right care at the right time in the right setting
• Reducing avoidable complications
• Reducing unwarranted and unjustifiable variation in care

It’s an easy prediction to say that a one-year CAD bundle would be expected to dramatically reshape the delivery of CAD care and reduce the overall utilization (and cost) of care in treating CAD patients, especially in diagnostics and procedures. Although no widespread study has been completed about the quality impact or savings derived from bundling payments for heath conditions or episodes, a number of small studies and recent efforts have spoken to the potential impact.

A study by the RAND Corporation looked back at some previous bundled payment initiatives and found that there were various cost reductions, with these coming from a combination of reducing utilization and reduced pricing of the bundles. A 2014 Health Affairs blog also studied some recent bundled initiatives and likewise cited evidence that bundled payments reduced costs, and cited reasons including a reduction in readmissions, shorter length of stay and reduced hospital charges.

Finally, I found a study that looked at the impact of capitated payment on cardiovascular volumes. While capitation is different from bundling, and the study was from the 1990s, the results were startling. With the shift to capitated payment, diagnostic catheterizations fell by 70%, and angioplasties (ballooning at the time) by 80%. And it wasn’t just volumes of certain procedures that dropped so dramatically. Overall cardiology spending, calculated as a PMPM rate for professional and facility services, fell by 35%.

Can we draw any clear conclusions from the limited bundling that has occurred already? Probably, but only to the degree that most of the bundling experience has been procedure-based and there is limited experience with the concept. Plus, the CAD bundle promoted by LAN is a whole different animal in its scope and potential design.

We are on the cusp of learning a lot more about bundling, especially since the CMS’s Center for Medicare and Medicaid Innovation (CMMI) unveiled its Bundled Payments for Care Improvement (BPCI) initiative back in 2013. This initiative called for applications from organizations on four broadly-defined bundling models around 48 conditions for bundling that together represent about 70 percent of spending on episodes of care. In October 2015, it announced that more than 1,600 participants had entered the BPCI program, including 415 acute care hospitals, 305 physician groups and 723 skilled nursing facilities (SNFs). What is helpful is that some of the BPCI bundles are condition-based, such as CHF. And most recently, bundled CMS initiatives were launched related to joint replacement and will be launching in oncology.

Since the CAD bundle would be unprecedented, it’s hard to tell whether less utilization is better or worse for patients, so we will need the appropriate checks and balances on the impact of this bundle.

While more time is needed to fairly assess the broad impact of bundling, I feel fairly certain that if a CAD bundle were implemented, and the participating parties figured out the best ways to coordinate care and optimize the incentive, they would begin to ferret out the inefficiencies and variations and eventually achieve better outcomes with lower costs of care, with at least part of that lower cost coming from a reduction in utilization.

I also think that the implementation will be messy, and that many organizations will be pushed far outside their comfort zones and current paradigms in learning to treat CAD in a truly integrated and coordinated fashion. A lot will depend on whether the initial launch of a CAD bundle is voluntary or mandatory. One would think that in a voluntary launch only those centralized and vertically integrated organizations confident in their ability to take risk and manage a full episode of care in a coordinated fashion would volunteer to participate.

If the CAD bundle design follows the model discussed in the white paper, I believe we should proceed with some caution and be very transparent about the results. Since the CAD bundle would be unprecedented, it’s hard to tell whether less utilization is better or worse for patients, so we will need the appropriate checks and balances on the impact of this bundle. It will be critical for health systems and payers to track outcome metrics, not just cost measures, to make sure that the changes in clinical practice that accompanies this bundle truly result in equivalent or superior outcomes.

That’s what I think. Please share your perspective.

---

 

Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

---