Leveraging Bundled Payments: A Guide for Health-Tech Organizations

CMS encourages affordable, quality healthcare at an efficient cost through payment bundling.  Though bundles have existed for some time, the Affordable Care Act enabled the adoption of new and innovative bundling models. One such Alternative Payment Model (APM) is BPCI - Bundle Payments for Care Improvement. Now in the Advanced model stage, the BPCI initiative offers a competitive landscape for healthcare providers across specialties and modes of practice that has the potential to grow significantly over the next few years.

For startups in the healthcare space it is critical to understand BPCI, its goals, and how providers are penalized or rewarded under its ruleset. Given the comprehensive, bundled nature of care under a BPCI model, startups offering wide-ranging services may find that they have a welcome place among providers enrolled in these offerings. Some startups delivering covered clinical services may qualify for new business or enhanced reimbursement as a result.

Episodes and Bundles

In essence, a bundle is a collection of services tied to an event and delivered within a fixed time period; much like visiting an all-inclusive resort where one checks-in on a given date and checks-out on another while having a myriad of services included.

Normally medicare pays providers for each service they perform: a ‘fee for service’ approach which does not account well for controlled cost against a known standard. This approach lends itself to quantity: a provider might order as many tests or services as are potentially appropriate, albeit perhaps not necessary for quality care, under the expectation that they will be reimbursed for each of them. A bundle allows provider coordination under a common incentive: a holistic, well-rounded approach to managing a medical or surgical episode which requires teamwork and a dedication to quality, efficient care versus maximizing services rendered across providers.

Bundles can either be condition- or procedure- based episodes. Under bundled payments, “episodes” are tracked and measured, starting with an event. For example, an episode may center around labor and delivery or a total knee replacement, indexed by some event which marks the start of the measurement period and including a fixed timeframe by which the episode may extend (typically 30, 60, or 90 days). They can be retrospective or prospective. In a retrospective model, providers continue to render care under a fee-for-service arrangement, however cost will be monitored and compared by the payer to a known baseline. Payment is made based on this measurement. In a prospective model, payment is rendered as a lump sum; providers are then reimbursed at a fixed, predetermined cost.

The BPCI-Advanced structure allows for twenty-nine inpatient and three outpatient episodes to be measured.

Enter the Health-tech Startup

Bundled payments, coupled with negotiated payments for all providers, can significantly benefit both the patient and providers. Managing cost within a bundle is not just about performing only necessary services, but also about mitigating potentially catastrophic events. Imagine a patient who presents with an illness and is told to follow-up for medication management with their primary care provider (PCP). Due to transportation issues and absence of any care coordination, the patient misses their PCP appointment and the condition worsens. What might’ve been managed efficiently through outpatient (OP) medical care then escalates to an ER visit and an admission; a worse outcome for the patient most importantly - and an enormous increase in cost of care during the clinical episode.

Imagine a health-tech startup that renders outpatient care coordination using ZapEHR. It’s built an application on ZapEHR enabling a unified patient record via multiple APIs from various sources and has contracted with the urgent care provider to provide outpatient coordination for patients under their care.

The startup is notified of the patient’s presentation at the emergency room for this indexing illness. Recognizing that they are in a bundled payment contract with the hospital service, the startup proactively monitors the medical episode and has a care management nurse contact the patient by phone that evening. During the initial interview, the nurse identifies transportation issues as a key barrier to care and is able to arrange for medical taxi services to bring the patient to their appointments on time. This simple action powered by a novel, custom solution prevents the patient from missing their follow-up and instead visiting an ER under deteriorating circumstances. The ROI for this service is clear to the urgent care provider: without such a solution in place the costs for this patient would have catastrophically surpassed the budgeted, prospective lump payment of the bundle.

Startups which offer new or innovative services such as care management or outpatient telehealth have a clear role to play in containing cost, preventing negative events, and ultimately being part of the team which renders quality and affordable patient care. The rewards for these innovations are huge: for measurement year 2020, Medicare paid out $628,000,000 to participating providers in reconciliation payments through BPCI Advanced*; there were also statistically significant decreases in unplanned readmissions and episode mortality during the measurement periods, as well as a decrease in net loss to CMS.

Pathways to Bundles

There are elements to effective bundle management which hospitals or outpatient procedure centers may not necessarily be ready to provide: collective data sources, the ability to develop informed tools from this information, and novel outpatient management. These three realms are common playing fields for startups:

Data Collection - Examples

• Cloud services and computing
• Database structuring and management
• APIs and nascent EHR solutions
• Connectivity for cloud computing
• Security
• Data integrity and FHIR compliance

Informed Tools - Examples

• AI/ML Patient Selection algorithms
• Cost mitigation and medical management models
• Risk calculation and actuarial models
• Proactive course of care alerts
• Patient profiles and leveraged big data concepts
• Care coordination risk scoring

Novel Management - Examples

• Outpatient, telephone care management
• Telehealth therapy and medical care
• Virtual visits, remote patient monitoring
• Digital portals
• Medical transport, pharmacy, or device management

This list is not exhaustive - in fact the creative newness of startups lends itself to providing new and innovative solutions. The end-goals remain similar to those of CMS, however: manage patients effectively and safely, lower costs, and improve access and efficiency. The tools vary; and hospitals or medical providers may lack the teams, time, or resources to develop such solutions on their own.

One critical element to bundles - and in fact the very foundation of them - is coordination of a patient’s episodic care. The bundle encourages cohesive, full-circle management of a disease or procedure.

Existing monolithic EHRs are notoriously poor at complex care coordination and patient engagement, in part because there is no one-size-fits all solution.  Different clinical organizations have unique workflows and care coordination requirements.

ZapEHR provides a platform for rapidly developing flexible, custom applications far beyond the limited configuration options available in large electronic record vendors. Connectivity and full-circle data integration (within the bounds of HIPAA and privacy laws) allow startups to complete the picture of a patient’s health or procedural journey to comply with bundle based care and reporting requirements.

Bundles in some form are likely here to stay; their evolution has proven they are effective at incentivizing providers while improving care for the patient. Startups are well-positioned to take advantage of these arrangements - whether as providers on a care team or as vendors offering improved, powerful solutions.

Interested in learning more about ZapEHR? Visit our website here or contact us at [email protected]. You can also interact with us directly on our Slack channel, e-mail us for more information.

Additional information about BPCI-Advanced, including a list of clinical service lines which are eligible for episodes can be found on the CMS Innovation website.

*- Source: Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model. CMS.GOV. https://innovation.cms.gov/data-and-reports/2023/bpci-adv-ar4-findings-aag

1. What is BPCI (Bundle Payments for Care Improvement), and how does it impact healthcare providers?
   • BPCI, or Bundle Payments for Care Improvement, is an Alternative Payment Model (APM) introduced under the Affordable Care Act. It aims to encourage affordable, quality healthcare by bundling payments for a specific episode of care rather than reimbursing providers for individual services. Healthcare providers participating in BPCI may receive rewards or penalties based on their performance in managing patient care within the bundled payment framework.
2. How can startups in the healthcare industry benefit from participating in BPCI?
   • Startups offering innovative healthcare solutions, such as care management or outpatient telehealth services, have a valuable role to play in BPCI. By providing cost-effective and efficient care coordination, startups can help healthcare providers manage patients within the bundled payment model, ultimately improving patient outcomes and reducing costs.
3. What are the key elements of effective bundle management under BPCI?
   • Effective bundle management requires collective data sources, informed tools developed from this information, and novel outpatient management strategies. Startups specializing in data collection, AI/ML algorithms, care coordination, telehealth, and digital portals can contribute to successful bundle management by providing innovative solutions to support healthcare providers.
4. How does ZapEHR facilitate coordination of episodic care within the bundled payment framework?
   • ZapEHR provides a platform for startups to develop flexible and custom applications that support care coordination and data integration within the bounds of HIPAA and privacy laws. By offering connectivity and full-circle data integration, ZapEHR enables startups to comply with bundle-based care and reporting requirements, ultimately improving patient care and outcomes.

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