NPC's Michael Ciarametaro Discusses the Move to Bundled Payments

As the healthcare system moves to an environment of value-based payment, bundled payments could become the next step in healthcare transformation. However, there are both opportunities and risks in this form of value-based payment, explained Michael Ciarametaro, MBA, director of research at the National Pharmaceutical Council, at the ISPOR 20th Annual International Meeting.

AJMC: Why is bundled payment the next step in transforming healthcare?

MC: The payment landscape is rapidly changing today to one that is dominated by value-based payments, of which bundled payment is one type. You see evidence of this in multiple press releases: the recent goal of HHS in terms of moving Medicare predominantly to value-based payments. This rapid transformation presents both opportunities and risk. The opportunity is reducing the 30% of care that is considered unnecessary and potentially harmful to patients, while the risk is where we move the pendulum from overuse to underuse.

AJMC: How can you identify when bundled payments can both constrain costs and enable high-quality care?

MC: The provider incentives within bundled payment inherently are going to reduce costs, so the question becomes: how do you ensure appropriate care? And this is where quality metrics play a key role. There are 2 essential questions there. One is, how much financial weight do you assign to the metrics to ensure that you do get quality care? And two, how do you go about designing your quality metrics to ensure care across all patients, rather than a subset of patients?

AJMC: What are key considerations that drive selection of services and reimbursement?

MC: There are 4 things we look at when appropriately incentivizing the physician and keeping risk manageable.

The first is purchasing outcomes for a relatively homogenous patient population. Second, is providing physicians the flexibility to provide appropriate care. Third, is evolving the payment amounts with physician practice and supporting innovation. Fourth, is appropriately leveraging quality metrics to assure quality care.

AJMC: What is so difficult about creating bundled payments around chronic conditions?

MC: Designing bundled payments between the inpatient and ambulatory environment in chronic conditions, you have the same set of considerations, the key difference is the size of the patient population. In inpatient, when you’re dealing with institutional providers and highly prevalent conditions, you have a large patient population, which inherently reduces variability and keeps physician risk in check.

When you move to chronic conditions and you move to an outpatient environment, your patient populations become inherently smaller, which increases variability and basically increases physician risk. So there has to be this emphasis on keeping physician risk manageable as opposed to being excess and uncontrollable.