Dr Michael E. Chernew Discusses Mandatory and Voluntary Bundled Payment Models

The advantage of having mandatory models is it enables you to get participation broadly across the community and it allows you to design the bundle in a way that’s not so intent on encouraging participation. If you have voluntary participation you are somewhat limited as to how you could design the bundle, because if you design it too aggressively no one will participate, explained Michael E. Chernew, PhD, the Leonard D. Schaeffer Professor of Health Care Policy; director of the Healthcare Markets and Regulation Lab in the Department of Health Care Policy at Harvard Medical School; and co-editor-in-chief of The American Journal of Managed Care^®.

Transcript

Were you surprised that HHS announced it would move back to mandatory bundles payments after initially backing away from them under former HHS Secretary Tom Price, MD?

I don’t know if I would say that they’re really move back towards mandatory bundles. They may have some mandatory bundles that they’re rolling out, but I don’t see a wholesale movement to mandatory bundles as opposed to voluntary bundles. In fact, I think inside CMS there’s a tension between bundles versus [accountable care organizations] and a whole series of other type of payment innovations.

I think the advantage of having mandatory models is it enables you to get participation broadly across the community and it allows you to design the bundle in a way that’s not so intent on encouraging participation. If you have voluntary participation you are somewhat limited as to how you could design the bundle, because if you design it too aggressively no one will participate. In a mandatory bundle you can be much more aggressive in what you design. I think there are situations where CMS understands that and that there will be some use of mandatory bundles.

I think the challenge with mandatory bundles is that you force providers into them who can’t succeed. Then you have a problem where either providers are dropping out of the program, or providers are going bankrupt, or there’s other sort of challenges going on for providers if they’re forced into mandatory bundles. So it’s always unfortunately a balancing act between getting more people in, designing the bundle to be aggressive, I think CMS wants to be aggressive, a bunch of other rules suggest they want to be aggressive, but doing so in a way that allows the delivery system to still succeed.