9 Things PTs Should Know About Payment Bundles

Are bundled payments the new wave of the future? If the move to a value-based healthcare system is any indication, then the answer is a resounding “yes.” That’s because, under this budding payment model, hospital and post-acute care providers will work and subsequently get paid as a team—rather than as individual entities—while overseeing a patient’s entire episode of care. The hope is that this setup will help tear down silos throughout disparate healthcare systems, while incentivizing providers to shore up wasteful spending. Here are nine things PTs should know about payment bundles.

  1. Improved quality of care: Today, one of the biggest challenges in health care is fragmentation—and that lack of overall coordination can impact the efficiency and quality of patient care. But, with payment bundles, it’s no longer every provider for him or herself. Instead, providers must work together to achieve optimal patient outcomes—meaning the focus shifts away from quantity of care (volume) and toward quality of care (value).
  2. Enhanced provider payments: Under policies like multiple procedure payment reduction (MPPR), PTs see smaller checks from Medicare when they perform more than one related procedure—regardless of value—on a patient during the same visit. But PTs won’t feel as strong of an impact under payment bundles, as they have some control over the contracts they enter—including the reimbursement structure. Thus, minding all the fine contract details still remains important.
  3. Upgraded communication between providers: We’ve all been there: The lack of coordination between physicians and specialists can create headaches for patients and providers alike. But, teamwork is one of the hallmarks of payment bundles, as the intent is for all members of a patient’s care team to not only communicate with one another on that patient’s progress, but also coordinate any future treatment as a team.
  4. Decreased incentive to perform costly care: Under payment bundles—and a value-based system in general—outpatient providers no longer feel pressured to perform unnecessary or costly interventions simply to boost revenue. “This is because a predetermined payment has already been negotiated, and the volume of procedures or appointments will not be taken into account in reimbursement.” Here’s the potential payoff: “By relying on more cost-efficient options, providers are more likely to earn an additional bonus for keeping actual costs below the target payment price.” Seems to be a win-win for providers and patients alike.
  5. Heightened risk—to a point: Bundled payment models typically impose downside financial risk when providers fail to meet pre-established cost standards. However, many contracts also put a cap on that risk. “For example, contracts may designate a ‘stop-loss’ point at which a particularly complex—and thus, more expensive—episode of care would revert back to FFS status, thus relieving the providers from absorbing too great of a financial loss.”
  6. Increased pressure to collect data: Many bundled payment programs require providers to collect and report certain data points—and jumping through those data-collection hoops doesn’t necessarily help in terms of creating care efficiency. Furthermore, because “needed data is often not available, payment models cannot always be seamlessly and effortlessly integrated, and variation exists among health care practices regarding the operational alignment of innovative payment strategies.” (That said, I absolutely support the call for therapy providers to collect and leverage meaningful, actionable data—whether or not they’re participating in bundled payment programs.)
  7. Elevated “patient leakage” repercussions: Patients, of course, are never locked into a contract to receive treatment or care from one or more specific providers—and they are free to up and leave without notice. Providers often take financial hits when these so-called “patient leakage” issues arise. And under a bundled payment system, early-departing patients can create even more headaches (i.e., reconciling how and when each provider will receive payment).
  8. Increased burden of coordination and communication: Payment bundles can create efficiencies through clear communication and coordination among care team members. But, that doesn’t always happen. Some providers actually feel less efficient when working with other team members—especially when those colleagues lack individual efficiency or neglect to communicate effectively.
  9. Lopsided payment distribution: In some care episodes, certain providers may feel like they’ve taken on a disproportionate amount of treatment. Therefore, teams of physicians, specialists, and hospitals may find it difficult to agree on a fair method of distributing the lump payment. Still, it’s imperative that they develop—and follow—a payment plan set at fair market value, because:
  • The federal anti-kickback statute prohibits the payment of remuneration in exchange for patient referrals; and
  • The Stark Law limits certain physician referrals.

So, the question is: to bundle or not to bundle? Is it really worth it for PTs to participate in team-based payment models aimed at improving patient care and reducing healthcare costs? Trying a new payment model—especially one built on a foundation of risk—might seem, well, risky. But, many providers are already seeing positive financial results from such programs—not to mention better patient care. And isn’t that what “value” is really all about?

Want to learn about more trends taking the healthcare world by storm in the coming year and beyond? Be sure to register for my upcoming free webinar, “Cloudy with a Chance of Reform: 5 Key Healthcare Forecasts for 2017.”