Analysis: UnitedHealthcare expands MA bundled payment plan offerings for 2020

According to a recent Healthcare Dive report, UnitedHealthcare announced April 10 its intention to expand its bundled payment offerings to providers in its Medicare Advantage plans in more than 30 states.The Healthcare Dive article went on to say, “The new program will let providers participate in bundled payments for eight specific procedures, including hip and knee replacements, coronary bypasses and spinal fusions, starting Jan. 1, 2020. The expansion builds on UnitedHealthcare’s participation in CMS’ Bundled Payments for Care Improvement – Advanced program in traditional fee-for-service Medicare. It will include care management and patient engagement tools, performance analytics and consulting and payment administration services for providers, according to a press release. Of the payer’s roughly 5 million enrollees in MA plans, more than 3 million are treated by providers in value-based models. UnitedHealthcare, which contracts directly with more than 1.2 million physicians and 6,500 provider facilities, estimates it will have $75 billion in annual provider reimbursements tied to value-based arrangements by the end of next year.”

Takeaway

First, this is a step in the right direction. Two of the challenges we constantly hear from members who participate in Medicare APMs is that infrastructure is expensive, and it’s hard to redesign care for just a segment of your business. Therefore, more volume paid under an APM allows you to spread the infrastructure cost, which is largely fixed or step-fixed. Also, more volume means more opportunity for bonus dollars, resulting in greater return for physicians who engage and participate in care process engineering. The more engaged physicians you have, the more likely you are to improve outcomes.

My guess is most (if not all) of the practices that are participating in UHC’s MA bundles are also participating in the Medicare BPCI-A model, so this checks all the boxes I just mentioned. Second, if the results are ever made public from UHC’s (or really any MA bundle), it will be interesting to see the magnitude of savings and where they come from.

In Medicare’s BPCI model (BPCI-A’s predecessor), reductions in skilled nursing facility (SNF) spending were the largest source of cost savings. It accounted for 70% of episode savings on averagea. The reductions in SNF spending stemmed from both the clinically appropriate replacement of SNFs as the first post-discharge setting of care with the patient’s home, supported by home health. And, in instances where an institutional setting of care was clinically appropriate, reduced lengths of stay. PAC utilization, like all other utilization, in Medicare fee-for-service is largely unmanaged so this is more or less the relatively “low hanging” fruit.

Medicare Advantage plans are typically a different story. In an example I’m personally familiar with, the risk-adjusted average SNF spend for a MA plan is 40% less than that for similar Medicare fee-for-service beneficiaries. While there are still opportunities for savings (readmissions), the sledding may be tougher and require concentrated focus on the social determinants of health and care coordination post-discharge between the bundled payment participant and the patient’s PCP.