Thoughts on Bundled Payments

Lila Kelso

May 24th, 2018

As health care costs continue to rise, the question at the forefront of providers’, patients’, and payers’ minds is: How do we understand and control these costs while still providing the highest quality care?

One approach gaining popularity has been the bundled payment model, in which a provider is given a fixed amount by a payer for a cycle of care. Amol Navathe, a professor of medicine and health policy at the University of Pennsylvania’s Perelman School of Medicine and contributor to the development of the Centers for Medicare and Medicaid Services’ (CMS) hip and knee bundled payments (made voluntary in 2013 and mandatory in some markets in 2016), recently discussed the successes of this model on the Knowledge@Wharton podcast. As Avant-garde Health, founded out of the value-based care model, continues to provide the support needed by our clients to successfully participate in bundled payments (particularly with the upcoming introduction of BPCI Advanced) it is important to accurately understand performance to date.

How does a bundled payment assist in reducing health care costs? By giving providers a set amount to provide care over a defined cycle, providers are motivated to reduce inefficiencies – and being able to identify areas where they can improve is key. By introducing a fixed cost for a procedure (with some additional reward for quality), Professor Navathe states that CMS reduced the cost of hip and knee replacements under the bundled payment model by 5% over the years following its introduction. Navathe argues that these bundles will also be successful in areas like cardiac surgery and the wide range of orthopedic surgeries. Avant-garde Health has continued to stay ahead of this curve, currently offering clients the ability to understand the cost of delivering care for orthopedic surgeries and cardiac conditions.

Under bundled payments, providers are also motivated to truly understand the cost of care, as reducing costs can increase the amount earned in a reconciliation payment. Avant-garde Health’s unique platform allows providers to understand just that--and to use that knowledge to increase revenue while also increasing the quality of care provided, creating a mutually beneficial cycle for both patient and provider. This is particularly prescient now as CMS plans to introduce the BPCI Advanced bundled payment model in October 2018, a voluntary model that will incorporate 32 clinical episodes. Avant-garde Health is excited to be a partner with your organization on this and other bundled payment journeys. Please contact us with any questions you might have about how you can earn higher profits with better quality care with the use of Avant-garde Health’s innovative suite of solutions.


How much hospital capacity can reducing length of stay generate?

December 12th, 2017

On our December 8th webinar, special guest Dr. Chip Davis, Chief of Hip and Knee Arthroplasty at Hershey Medical Center, explained how his team was able to achieve a $6,000 per patient cost reduction in hip and knee replacements. He detailed the action steps that were implemented to impact change.

Avant-garde Health logo



Why Avant Garde Health