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Bundled Payments: The Process Begins with the Patient

Three national experts in bundled payment design and implementation spoke to a packed auditorium of more than 150 health care executives in Denver last week at CIVHC’s Bundled Payment Seminar to make the case that bundled payments are changing the face of health care across the country and illustrate how Colorado providers, payers and purchasers can—must—embark on this path. The consistent message from all presenters was that bundling is not just, or even first, about controlling costs. It is a critical technique for improving quality and creating a more patient-centric health care system.

At the largest multi-stakeholder attended event of its kind to date, Matt Flora, Supervisor of Statistical Development for Blue Cross Blue Shield of Arkansas (AR BCBS), kicked off the day by explaining the importance of data and detailed analytics both to develop bundles and to help providers succeed in this type of payment arrangement. AR BCBS provides ongoing data analytics—what he termed “extreme volumes of data”—to their providers to show their performance against peers and best practices, and help them manage within bundled targets. Indeed, Matt said that “you could not inform the provider community enough.” Quality targets are essential to the structure of AR BCBS’s bundles: if participating providers don’t meet quality metrics, they don’t share in the cost savings—even if they came in below cost targets. And, for those who note that most health plans’ claims processing systems are not designed to accommodate prospective payments, BCBS has the answer: they set a bundled budget, providers bill and the plan pays FFS against that, and costs are “trued up” retrospectively at the end of the year. It’s a beautiful design that is simple and clearly defined.

Deirdre Baggot, VP of The Camden Group, then brought in a new, and often unappreciated, element of successful bundled payment: care redesign, the “linchpin” of a patient-centric bundled product. She noted that, if all you do is give a discount to providers and don’t redesign the work flow and care processes, you’ve accomplished nothing. Something truly inspirational in Deirdre’s remarks was the idea of embedding patients and families in the care redesign process to spur innovation. By involving patients in the process of bundled development, you can provide for the things they need and eliminate things they do not. Deirdre said it well when she stated, “The goal of the bundle is to provide the patient with everything they need to have a great outcome…and nothing more.”

Ruth Coleman, Founder and CEO of Health Designs Plus, continued the theme of putting the patient first by emphasizing throughout her remarks that the reason to bundle health care services is to align services and improve quality. Ruth is a pioneer in the world of bundled payments; in fact, she coordinated her first bundled product back in the 1990’s. Today, Ruth has created “Centers of Excellence” (COE) bundles with leading providers around the country for conditions such as heart, spine and total joints. Major employers such as Wal-Mart, Lowes and Pepsi pay 100 percent of the cost for an employee to travel to Cleveland Clinic, Mayo and others for certain elective procedures because those hospitals have developed bundled approaches in which the quality of the product is consistent. Note that these are not necessarily the lowest-price providers.

Ruth stated that employers, particularly large national companies with employees in numerous states, can see the wide variation in quality that exists in our country today, and they won’t stand for it. She, and her clients, have also been shocked at the incidence of unnecessary surgeries and, as a result, have incorporated shared decision-making tools into their bundles to ensure that patients get the appropriate care for their condition. For example, she found that 50 percent of the spine cases sent to one COE are told they would not benefit from spine surgery—yet those patients would likely have received that surgery if they’d gone to a different facility. She noted, “Bundles, if done right, can create predictability, transparency, comparison across regions and a focus beyond the simple cost/unit.”

For Colorado providers interested in developing bundles, the first ingredient is data and CIVHC can provide immediate help on that front. The Colorado All Payer Database (APCD) has claims information for more than 2 million lives currently (approximately one-half of the insured lives in the state) and is on track to have over 90 percent of covered lives by 2015. The APCD can provide some of the essential cost and utilization information to help providers, payers and purchasers launch bundled payments.

CIVHC’s intent for this seminar was to provide information to stimulate meaningful discussion among key players in Colorado’s medical community. Creating bundles is not easy and often the work must be started without a clearly defined financial win for the organization. However, the improved value to the patient through greater cost and quality transparency makes the undertaking well worth the effort. We have heard significant interest from providers, payers and purchasers in implementing bundled payments in Colorado. In the coming weeks we will be engaging all of those with whom we’ve launched preliminary discussions to accelerate the process of bundled development. As Ruth Coleman stated so well, “If you’re not doing it now, watch out! We could be flying your best cases five state away for care.”

About the Author: Bob Kershner is CIVHC's Director of Health System Payment Strategies. Contact him at

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