Define bundles, set provider incentives

How to build a successful bundled payment program

FierceHealthPayer: Which of these steps do you think is key to payers creating a successful bundle?

Andréa Caballero: They definitely can't skip step one of analyzing the claims data. Because if you analyze it and determine you don't have the volume or the prices couldn't go lower or quality is already really high, then it's not worth entering into a bundled payment agreement. So that's an essential step.

Another key step is defining your bundle and really being very clear about what is inside and outside of the bundle. There are many ways to do this so you absolutely must have clarity around what's in and what's out in order for this to work. And that conversation has to be understood by the payer and provider so that everyone is on the same page. It's also important to determine the exclusions--which patients are eligible to participate in the program. Because if you have too many people who aren't eligible to participate in the program, you've diluted your savings.

FHP: Have you found any one or two types of incentives that work better to steer patients to providers in bundled payment programs?

Caballero: I don't have any empirical evidence to cite, but our knowledge of the steerage that's created with reference pricing is pretty powerful. CalPERS did reference pricing on hip and knee replacements, but they didn't have a bundled payment (so I don't want to equate the two exactly), but reference pricing as a benefit design strategy really created a significant shift to providers who were willing to accept the reference price.

We would probably say that reference pricing packaged with bundled payment naturally fit together. I think we'll eventually see the strategy of centers of excellence, while too new to have any real evidence around it yet, as a powerful benefit to be coupled with bundled payments.