Study: Private consultancies can influence hospital participation in CMS bundled payments model 

Partnering with private consulting firms could prompt hospitals to participate in a greater number of episodes in a federal bundled payments program, according to new research.

The voluntary Bundled Payments for Care Improvement initiative Advanced Model, or BPCI Advanced, compares spending for specific clinical episodes, like congestive heart failure or sepsis, with benchmarks set by the Centers for Medicare & Medicaid Services. Hospitals take on financial risk in the program — if spending is less than the benchmark for a clinical episode, hospitals earn a reward; but if spending is more, hospitals pay a penalty.

Further, eligible hospitals can participate in the model independently or partner with a convener, including private consulting firms, which share in the financial risk.

“We were interested in understanding how private consulting firms influenced hospital decisions about participating in [the] Medicare bundled payment program,” said Dr. Nicholas Berlin, study author and national clinician scholar in the Institute for Healthcare Policy and Innovation at the University of Michigan, in an email. “More specifically, we studied whether hospitals that partnered with these firms were more sensitive to the financial incentives of this program.”

For the study, which was published in Health Affairs, researchers examined a sample of Medicare fee-for-service claims for beneficiaries discharged between Jan. 1, 2013, and Sept. 30, 2016. The total sample included 2,988 hospitals across 28 BPCI Advanced inpatient clinical episodes. Hospital participation data and hospital episode participation data for BPCI Advanced are publicly reported by CMS.

Approximately 63.6% of clinical episodes among participating hospitals included private consulting firms.

The study shows that nonteaching and for-profit hospitals participating in BPCI Advanced were more likely than other hospitals to partner with private consulting firms.

Further, hospitals that partnered with consultancies participated in the model for a greater number of clinical episodes than those that did not.

“We were surprised by how hospitals that partnered with these firms were more likely to participate in more episodes,” Berlin said. “These hospital-firm partnerships must have thought that they could succeed in some episodes, where other hospitals did not.”

Hospitals that partnered with consultancies were also more likely to select episodes with higher CMS price benchmarks and episodes with greater opportunities to reduce spending on post-acute care and readmissions.

But, while partnerships with consulting firms may increase participation overall, these firms are “savvy and highly sensitive to the financial incentives, potentially making it more difficult for CMS to save money in the long run in this model,” Berlin said.

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