Aver Insights recently spoke with Steve Kohlmann and Rory Weier, Aver’s in-house experts on the PROMETHEUS Payment model and Bundled Payments for Care Improvement (BPCI), respectively. The following transcript has been edited for length and clarity.
Aver Insights (AI): In our last post, we walked through key elements of PROMETHEUS Payment and BPCI. Here, we focus on why and how payers might use them. To kick things off, let’s talk about why a payer should consider using any episodic or bundled payment methodology.
Rory Weier (RW): An episode or bundled payment strategy helps payers advance care coordination and cost containment. These models show payers how to leverage their contracting and payment tools to incentivize care coordination, ensuring that all providers involved in an episode of care are aligned and cooperating on cost to avoid overtreatment and waste. Providers must coordinate with one another in order to succeed in a bundled payment environment.
Steve Kohlmann (SK): I agree with Rory. I think the real incentive that payers can sell to providers is that they, the providers, will have more control around care coordination and appropriate service utilization. In a fee-for-service world, providers may be working harder to increase volume that could, in some cases, be avoided. In an episode or bundled payment world, providers can work more efficiently and still increase their profits. Also, because use of bundled payments is not yet widespread, payers and providers both can scoop up market share by moving quickly to these models.
AI: What types of payers should consider using BPCI or PROMETHEUS methodology?
RW: The BPCI methodology really works for any type of payer. It’s important to remember that even though BPCI was designed by Medicare, it isn’t just for a Medicare population and is easily applied to a commercial population. The one key consideration for a payer is the model’s reliance on Medicare Severity-Diagnosis Related Groups (MS-DRGs). If the payer doesn’t utilize DRGs in its hospital payments, the provider will experience a more significant change in how their contract rate is determined and reimbursed.
SK: PROMETHEUS is generally a good fit for payers because it categorizes so much of the medical spend into a defined episode. Unlike BPCI, Prometheus does also include procedures and conditions not primarily treated within the inpatient hospital setting. However, because there are so many distinct episodes a critical volume within each episode category is really necessary to get meaningful information from a payer’s data. This may eliminate some lower volume episodes from a payer’s consideration or review.
AI: Where are you seeing payers using BPCI or PROMETHEUS methodologies today?
RW: While we have seen payers implement the BPCI methodology with their network hospitals, the greater interest lies in using the methodology as a lens through which to view claims data and then using this information as a launching point to begin a bundled or episodic payment program. There is great interest in understanding the methodology, but less in direct operationalization of it. I do think there is an opportunity for some payers to “piggyback” on Medicare bundled payment programs. For example, in markets where providers are engaged in BPCI, or where Medicare requires participation in BPCI-based episodes, such as the Comprehensive Care for Joint Replacement model or the upcoming cardiac and hip surgery bundles, payers might consider approaching providers with similar payment arrangements.
SK: We’ve seen a similar situation with PROMETHEUS - lots of interest in analyzing claims history using the methodology, but the movement to actual contract implementation has been slower. PROMETHEUS is a good leader for payers, particularly larger payers who see it as a good place to initiate a movement toward episodic payments because the definitions of the episodes are already available. In addition, the PROMETHEUS team is working with a number of state-wide organizations to implement its methodology on a larger scale.
AI: How does Aver help payers use BPCI and PROMETHEUS methodologies?
SK: For any payer, regardless of what type of methodology they want to consider, we make the process as smooth as possible. We are keenly aware of the importance of good, quality data to generate good, quality outputs, so we work very hard at the start of a relationship to help payers identify the right data to send. At that point, we run the data through our HCI3-certified model, providing episode-level reports for all 97 episodes currently defined by PROMETHEUS. Our Episode SnapshotTM and Episode AdvantageTM products provide big picture data on each episode definition and allow for provider performance analysis at the individual or group level. We also offer an opportunity analysis to help payers identify areas of focus when moving toward episodic payment contracts with providers.
RW: The process for data analysis using BPCI methodology begins in the same way Steve described for PROMETHEUS. There are slight differences between the reporting products for the two bundle methodologies since episode lengths can vary in BPCI Models 2 and 3, and BPCI is largely focused on post-acute steerage. In either scenario, our reports offer information on the prevalence of all episodes, the average cost, cost variability, and more. This initial data analysis helps payers identify episode volume and cost variability that is potentially manageable, providing a great roadmap toward a bundled payment program.
AI: Thank you both very much for walking us through these two episode payment models and illustrating how Aver helps payers assess and operationalize bundled payment opportunities.
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