Hospitals’ Control of Bundled Payments ‘One of the Biggest Threats’ to Post-Acute Success

Ever since the government came out with its most recent model for bundled payments, acute care has been in the driver’s seat.

Under the Bundled Payments for Care Improvement Advanced (BPCI Advanced) program, hospital providers and physician leaders are the only ones who can initiate episodes of care. The Centers for Medicare & Medicaid Services (CMS) provides a single reimbursement for providers along the continuum, but unlike previous iterations of the bundled payment program, SNFs can’t be episode initiators.

Still, many experts have argued that SNFs have opportunities under the program. Even though they can’t initiate episodes, they can still find opportunities to take on risk from the BPCI bundler, according to Brian Ellsworth, vice president of policy and payment transformation at the Minneapolis-based consulting firm Health Dimensions Group. And SNFs can still serve as conveners, a role where they can take on some or all of the downside risk for more conservative hospitals, Anne Tumlinson, founder and CEO of consulting firm Anne Tumlinson Innovations, told Skilled Nursing News.

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But hospitals having control of the so-called bundles could undermine the reasons for optimism. In fact, the current bundled-payment structure represents a serious danger for post-acute providers, Phil Fogg, president and CEO of the Milwaukie, Ore.-based Marquis Companies, said Monday at the LTC 100 conference in Naples, Fla.

“If the hospital owns the bundles, I really do think it’s one of the biggest threats to our profession,” Fogg said during a panel discussion on the future of skilled nursing. “When you get another provider in the health care continuum who’s profiting from lowering our utilization, I have a problem with that.”

Fogg did stress, however, that post-acute care bundles are the way of the future, if for no other reason than the fact that the payers would be the ones driving utilization otherwise. Bundled payments — whether across the whole continuum or use within the post-acute space — are ultimately how post-acute providers will align their motivations and goals with those of payers.

Still, the impact of bundled payments can vary greatly by market and by the scope and capabilities of the health systems and accountable care organizations (ACOs) in a given region, according to Fogg’s fellow panelists.

“A lot of our buildings are in second-tier markets, so we don’t see a lot of that bundling in the Boise and smaller cities throughout,” Owen Hammond, CEO and principal at Cascadia Healthcare, said. “So for us, I’m a little skeptical of picking and choosing partnerships. As we continue to move out to and roll out into bigger and bigger markets, I might have a different opinion on that, but right now we’re not seeing the impact as much.”

In larger markets, such as Los Angeles and San Diego, there’s more need and more advances, he noted. But when it comes to location, there are other considerations. For BaneCare Management, which is located in Braintree, Mass. and operates 12 SNFs in the Bay State, ACOs create significant pressures both operationally and on the bundled-payments front. These models have particularly intense length-of-stay demands in Massachusetts, BaneCare president Richard Bane said during the panel. And their effect on SNFs doesn’t stop there.

“It’s just hard to participate and be successful in the bundles when we have so much of an external press from the ACOs in our market,” he said. “We have probably seven or eight prominent, significant ACOs that we deal with, and just trying to juggle those relationships — all of which have different data requirements, all of which have different metrics — is a challenge.”

Multiple studies have found that when it comes to bundled payments, cutting post-acute utilization spending saves money. The Comprehensive Care for Joint Replacement (CJR) bundled payment model resulted in spending reductions of $1,084 per episode between 2016 and 2017, researchers from Harvard University found — a drop that came almost entirely from a 5.9% relative decline in the number of episodes that resulted in a patient discharge to a post-acute care facility. The Next Generation ACO model — which led to approximately $62 million in net savings for Medicare in its first year of operations — achieved most of its spending decline on reduced Medicare spending for post-acute care, with SNFs bearing the brunt of the drop.

That said, the Center for Medicare and Medicaid Innovation (CMMI) recently floated the concept of post-acute care bundles, and there are still lessons related to reduced costs, lower lengths of stay, and other metrics from work with bundled payments that providers can draw from.

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