For-Profit Hospitals Use Conveners for Bundled Payment Success

The use of conveners for bundled payment success is more common among non-teaching and for-profit hospitals, and those that use conveners tend to select more episodes with higher target prices, according to a recent study.

Researchers from University of Michigan and Michigan Medicine paired claims data with data on hospital participation in the Bundled Payments for Care Improvement Advanced (BPCI Advanced) to learn more about the role private consulting firms—otherwise known as conveners—play in the CMS-run model.

The results published in the latest edition of Health Affairs showed that there are several opportunities and drawbacks associated with the use of conveners in bundled payment models.

Conveners can encourage participation in voluntary bundled payment models like the BCPI Advanced by allowing hospitals to share financial risk of selected clinical episodes with another entity. This proved to be especially true for non-teaching and for-profit hospitals, which have historically been less likely to participate in voluntary alternative payment models, researchers explained.

It could be a win for voluntary models like the BPCI Advanced. Voluntary models struggle to generate participation that is nationally representative of hospitals, meaning findings from model demonstrations cannot always be applied more generally.

Additionally, hospitals partnering with conveners were more likely to participate in more clinical episodes and for episodes with historically higher spending on post-acute care and readmissions—another potential win for bundled payment models.

The study showed that a $1,000 increase in episode target price was linked to a 1.66-percentage-point increase in the probability of episode participation in the model versus a 0.72-percentage-point increase for participating hospitals without a convener.

Incenting participation in a sufficient number of clinical episodes is another major challenge of voluntary bundled payment models, researchers stated. The use of conveners in these models could motivate deep penetration of the models, which could lead to greater overall savings for Medicare.

Hospitals participating in episodes with higher post-acute care and readmission spending can also benefit since bundled payment savings are generally driven by spending reductions after the index hospitalization.

Previous research has shown that conveners analyze target prices, as well as post-acute care utilization and readmissions, when helping participating hospital select clinical episodes.

However, this trend among hospitals with conveners could spell trouble for Medicare. Researchers explained that episode spending at hospitals with higher target prices will naturally move down to the average episode spending of all hospitals through mean reversion.

In the finance world, mean reversion is the assumption that an asset’s price will shift to the average price over time. For Medicare, episode savings through mean reversion is a drawback because the BPCI Advanced does not adjust for this phenomenon, so the unnecessary shared savings paid to hospitals will limit savings for CMS, researchers explained.

Fortunately, their sensitivity analyses indicated that hospitals with conveners were not more likely to select clinical episodes with lower volumes and other characteristics strongly associated with mean reversion.

However, they suggested that future iterations of the BPCI Advanced consider “the trade-offs between the financial losses associated with not adjusting for mean reversion in target prices and the potential benefits of increased hospital participation and opportunities for per episode spending reductions.”

BPCI Advanced has suffered from deep financial losses—close to $2 billion over the course of ten performance periods, according to CMS. But the federal agency announced last year that it would change target price calculations to ensure accuracy for both CMS and participants.

This move sparked concerns among stakeholders, many of whom thought the change would impact participation in the future.