Why Do Bundled Methods Fail?

March 8, 2016

Alessia D'Anna

Do bundled methods play a role in achieving sustainable programs? According to John W. Adams, president and CEO, Global Healthcare Alliance, the answer is yes.

Directorial failure, imbalanced economics, inadequate and untimely data, and mismanagement are among the reasons why bundled strategies fail, according to a presentation by Adams at the Care Coordination and Technology Congress Inaugural Summit on Bundled Payments.

Global Healthcare Alliance defines “sustainable programs” as programs that unremittingly improve the quality of patient care by utilizing all possible administrative processes, care techniques, methods, solutions, technology, and more, in order to achieve desirable outcomes. 

Additionally, Adams said that sustainable programs that are successful are those that show evidence of care such as long-term contract continuity (serving participants with provider care coordination and payer contracting); improve overall population health to promote effective member engagement; and demonstrate “continuous improvement in value through cost predictability and achieved cost savings” by avoiding contracting techniques that shift costs from one party to another or allowing time for care delivery costs to adjust to care episodes. He stated that in order to benefit all parties involved (payer, provider, and most importantly—patient), all of these measures must coexist. 

A range of practices develop value-based programs; they offer multiple distinctive advantages (when given the proper data) and administrative capacity. Bundled methods improve the quality of patient care and provide clearer access and utilization of care while simultaneously providing value through cost predictability and actual cost performance among all constituents.

“Bundled contracting should only include provider participants with proven patient experience at desirable levels of quality,” he suggested. As a result, payers and providers have the opportunity to achieve savings through bundled contracting methods, when there is an agreement between the two on the priority of patient care quality.

Why Do Bundled Methods Fail? 

“Bundled methods fail when overall program value is not sustainable,” Adams said. Unjust economics, improper/untimely data, mismanagement, and poor administration are all factors that can contribute to unsustainability. Adams detailed each of these in his presentation. 

    Unjust economics. Bundled pricing that impedes profitable care delivery, imposes unachievable expectations, or fails to deliver sufficient savings reflects in imbalanced economics causing unsustainable value programs. 

    Improper data. Insufficient data frequently results in failure to inform program improvements in a timely manner. The untimeliness and inadequateness of this data can negatively effect program terms and performance expectations.

    Mismanagement. Misconduct in bundled methods can result in a lack of provider incentives to control costs and lack of payer-sponsored member engagement.

    Administrative failure. When an administrator lacks expertise in managing complex programs that can affect system controls, it can result in a lack of mitigation strategies and system functionality designed to overcome legacy billing and adjudication processing.

Core Objectives for Sustainability

The first core objective for improving sustainability is having trusted regulators for driving operational transparency. A trusted arbitrator can balance the brand value, economics, risks, and strategic nature of these programs more efficiently than direct contracting methods while simultaneously executing decisions in the coordination of care. The arbitrator enables the payer and provider, focusing them on the operational objectives they individually control while prioritizing the focus on patient quality.

The arbitrator needs the proper tools, technology, and technique to inform all participants of their program performance, how to manage any complications of core payer/provider system insufficiencies, and how to manage the finances and risks with complete transparency. 

Programs should also not be defined as “payer-centric” or “provider-centric.”

The second and third core objectives are to have a committed payer engagement model and to endlessly improve the provider care delivery mode. Program performances should be assessed, formed, managed, and refined with the proper data. Providers should be enabled and taught how to work profitably within the “bundle.” Drive operational performance, internal cost models, and peer-based/comparative performance guidelines with clear metrics.

Active patient participation throughout the consumer lifecycle is another core objective. The transition from member engagement to patient engagement should be made early on, but adherence to the program should take place in 3 stages—before, during, and after. The presentation also recommends addressing finances prior to giving care, when possible.

The final core objective is the utilization of automation and systems tailored to value-based programs. Legacy payer adjudication systems and enhanced PMS/EMR systems should be supplemented in order to avoid administrative errors.

It is vital that sustainability become a goal, if not the main goal, of value-based programs in order to benefit the payers, providers, and patients involved.

Payers will benefit by acquiring lower costs per episode because operational effectiveness can reduce administrative costs and complexities. Providers will be given the opportunity to practice the highest quality medicine within coordinated care environments across numerous facilities/specialties and improve profitability through cost controls. Lastly, patients will have access to the highest quality of care and will have the choice in achieving a balance of quality versus cost.—Alessia D’Anna