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Responding to the Medicare Bundled Payment Initiative


A leading Mid-Atlantic three-hospital system


To assess the strategic and financial opportunity related to the CMS Bundled Payments for Care Improvement (BPCI) Initiative. The system is a mix of academic and community-based hospitals and employed and independent physicians.


Veralon provided a strategic and financial assessment of the BPCI Initiative. We worked with a data partner, who cleaned and loaded historical claims data, including inpatient, outpatient and post-acute claims into a database.

From this complex data, Veralon assessed:

  • MS-DRGs that were potentially suitable for bundled payments based on volume and cost
  • Opportunities for improvement based on internal variation in care patterns
  • Opportunities for savings compared to regional practice patterns
  • Two key services lines, orthopedics and cardiac care, were further assessed through facilitated discussions with physician leaders from across the health system.

Working collaboratively with physicians, finance and payer relations, Veralon analyzed the financial impact of pursuing major joint or congestive heart failure bundles over a 30 and 90 day episode length. The following items were considered:

  • The impact of the discount
  • CMS shared savings
  • Care redesign requirements
  • Costs of implementation
  • The impact of overlapping care improvement initiatives.


As a result of the analysis, the health system was able to say “no” to the Medicare BPCI opportunity, with confidence. For strategic reasons, the health system decided to focus on commercial bundled payment initiatives instead.