By Jason McCormick

Vice President, Partner Services at Fusion5

At the core of any bundled payment program is the ability to control costs generated by the services that patients receive during the bundle episode period. The provider, or the “episode initiator”, is in control of many of the costs associated with the patient’s surgical intervention, but not necessarily those that the patient may require during the post-acute phase. Depending upon the thoroughness of the initial data review and the information that was obtained from that process, you may have already completed half of the requirements to ensure the second critical element of bundled payment programs is in place.

The second critical element of any bundled payment program is the ability to identify and engage a preferred provider network that will potentially provide the services that may be necessary during the bundle episode period. Regardless of the type of bundled payment program you are implementing, you will not be able to successfully control all the services that your patients will need. A preferred provider network offers opportunities for patient steerage to higher performing providers, which is usually a good thing when it comes to a reduction in overall spend.

In the case of programs such as CMS’s BPCI-A program, a preferred provider network may consist of organizations that provide skilled nursing facilities and services, home health services, physical therapy services, or other non-medical services such as transportation or pet boarding. If you are implementing a bundled payment program for surgical and post-op services initiated in an ambulatory surgery center, you may find that implant costs, anesthesia services, or after-hours on-call services can make a huge impact on the overall cost. The data review should have helped you identify which of the providers or organizations that have been used in the past may have better lengths of stay, lower complication rates, higher patient satisfaction scores, or lower utilization of “add-on” services to reach the end result.

An example of the information that should have been obtained through the data review and now be used to identify the preferred provider network is the average length of stay and readmission rate of patients who were sent to skilled nursing facilities following a hip hemiarthroplasty for a femoral neck fracture. The baseline period data may show that four facilities accounted for 85% of the skilled nursing utilization during the period, but that one facility had an average stay double the length of the others. If the number of cases at each of the four facilities were relatively close, you would want to investigate the reason for the higher length of stay. If the same facility had a 25% readmission rate compared to rates between 5% and 10% for the other facilities, you will probably begin to paint the picture that this specific facility is not offering the same quality care that the other three facilities are delivering. A significant cost reduction can be realized when patients are made aware of the difference in quality and outcomes of the other three facilities. Patient steerage becomes not only a cost reduction tool, it becomes the right thing to do as far as patient care is concerned.

So once the preferred provider network is identified, how do you engage them in a way that makes them want to perform on an even higher level? Any services that you may be able to offer those facilities will only increase their willingness to work with you. In the case of the hemiarthroplasty, maybe you offer additional training to the preferred providers regarding specific rehabilitation exercises to increase patient mobility or maybe you offer to help ensure the correct clinical pathways and protocols are used on these patients. All of these value-added tools help the preferred network market their facility or the services that they provide to other patients. But, the real opportunity to control costs and realize cost reductions comes in a different part of the conversation with the potential preferred providers.

Remember that bundled payment programs are about control, and the hardest things to control are those that you are not directly responsible for. It is great to have a skilled nursing facility who is willing to accept your patients that need care and work within your clinical pathways, but if they are unwilling to discharge the patient when the patient meets the surgeon’s goals, it becomes a losing situation. It is one thing for a facility to pay lip service to the idea of keeping a lower length of stay and being aggressive in physical therapy, but not quite as great for your cost controls when the patient is not working towards mobility goals and begins decompensating due to not being ambulated per the stated protocol.

The key to engaging a preferred provider network is setting the expectations up front and ensuring that the expectations will be delivered. If those expectations are not acceptable to the proposed partner, then there’s no reason to help steer patients in that direction. You are looking at an eventual “bundle buster”, and it doesn’t take many of those before you have a hard time recovering. The same can be said for negotiating with implant manufacturers for outpatient procedures.

A good bundled payment program will be built on a little bit of tough business and negotiating. Remember, there are other providers or manufacturers out there that would be more than happy to have you refer those patients to them or use their devices. As a matter of fact, they may offer the services for a significant amount less than they originally did now that they realize that you were willing to steer patients in another direction. The important thing to remember through this process is that your protocols are the ones that are the best ones and are the ones that you believe have the best impact on outcomes and quality. So, concentrating on those clinical pathways and setting up effective lines of communication will be the next step in ensuring you are crushing all of your bundled payment cases and winning with your bundled programs.

If you are not realizing the quality outcomes or cost reduction that you were hoping would be a result of your bundled program, we are here to help. If you are struggling with putting together the entire process and making it work for your organization, we would be happy to engage in discovery of potential opportunities to assist your organization. If you have found it difficult to get your practice’s providers on board with the bundled program and standardize the processes used to crush the program, feel free to email me at

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