Few post-acute care facilities took part in Model 3 of Medicare’s Bundled Payments for Care Improvement initiative and nearly half dropped out, a new JAMA report finds, raising questions about such voluntary programs.
The CMS payment model gives participants a target price for 30-, 60- or 90-day post-acute care episodes, which begin in the 30 days after hospital discharge. The risk-based initiative lets organizations keep a portion of what they spend below the target price. PAC organizations that spend over the limit must pay Medicare some of the difference.
The scheme makes the PACs the lead organizations instead of acute care hospitals. These PACs include skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, physician group practices and home health agencies.
The JAMA report, led by A. Jay Holmgren from the Harvard Business School, found “persistent” PAC facilities were more likely to be higher quality, for-profit and multi-facility organizations. The report also found that SNFs that were persistent participants in Model 3 were more likely to have four or five stars rather than one star in CMS' Nursing Home Compare ratings.
PAC providers may have been “unsure of their ability to succeed in the program, possibly due to a lack of organizational resources and administrative capabilities that those larger, high-quality organizations have. It’s also possible that they may have simply decided it wasn’t worth the risk,” Holmgren told Healthcare Dive.
The report found little interest among PAC facilities. Only 3.7% of the 31,600 eligible PAC organizations in the U.S. took part in the program. Of the 1,177 PAC participants, 1,059 were SNFs, which made up 6.8% of eligible SNFs.
Breaking down the numbers further, the researchers found that 669 PAC organizations were “persistent participants.” That’s only 2.1% of eligible PAC organizations. Many dropped out of the program. Just 56.8% of PAC organizations that participated in the model remained in the program.
Issues with voluntary programs
One complaint about voluntary payment programs is that they allow organizations and providers to self-select. This can limit what’s learned from these projects.
“The organizations likely to participate are the ones that think they can succeed and make the program a net positive for them. (Voluntary programs) aren’t going to move the needle on the high-cost providers who can simply choose not to participate,” Holmgren said.
Another problem is that few facilities are interested in voluntarily taking on risk.
“With so few participants (in Model 3), it is difficult to evaluate if the program would’ve generated significant savings — especially considering voluntary programs allow for a significant selection effect. A mandatory program would avoid that issue,” Holmgren said.
The issue with providers not wanting to take on risk was also evident in another recent report in JAMA that focused on the BPCI program. The report found that only 12% of eligible hospitals signed up for BPCI and 47% of those facilities dropped out of at least one condition.
Also, a recent Health Affairs study found that mandatory CMS bundled payment initiatives are more effective. The report said mandatory programs “generate robust evidence and either mandatory or additional targeted voluntary programs may be required to engage more hospitals in bundled payments.”
A 2017 Brookings Institution report also backed mandatory payment programs. Brookings said selective participation may affect results and warned that moving away from bundled payments could affect private payment reforms that complement CMS programs.
Despite those objections, the Trump administration prefers voluntary programs rather than requiring healthcare providers to take part in risk-based payment programs. CMS Administrator Seema Verma calls mandatory programs too restrictive. Previous HHS Secretary Tom Price opposed mandatory programs as well and CMS canceled its mandatory hip fracture and cardiac bundled payment models last year.
There is some hope for mandatory payment plan supporters though. Current HHS Secretary Alex Azar said earlier this year that some mandatory pilot programs may be needed to gather data.
That’s a sentiment echoed by Holmgren, who said his study shows that policymakers need to make changes.
“If policymakers are serious about using payment reform to control costs in the post-acute care space, they need to move on from Model 3 of BPCI in some way, whether that’s mandatory programs, making acute care hospitals responsible for post-acute care spending or something else,” Holmgren said.