More Healthcare Providers Using Bundled Payment Systems, But Some Still Undecided Ahead of CMS Application Deadline: KPMG Survey

NEW YORK, April 15, 2014 (GLOBE NEWSWIRE) -- More healthcare providers indicate that they have already adopted bundled payment models, which package out- and in-patient costs, professional fees and post-discharge costs related to specific conditions into one payment. However, some say they are still undecided as the Center for Medicaid and Medicare Service (CMS) Bundled Payment program April 18 application deadline looms, and more say they do not want to use a bundled model, according to a poll conducted by KPMG LLP, the audit, tax and advisory firm.

In the KPMG poll of 140 healthcare providers conducted on March 26, largely represented by hospitals and health systems and large scale physician groups, 44 percent said they are "already working with bundled payments," - up from 38 percent in KPMG's October poll on this issue. Meanwhile, 29 percent remain undecided, down slightly from 36 percent in October. Interestingly, 7 percent said they had no intention to offer bundle payment plans – up from only 2 percent in the October poll. Twenty percent said they're not there yet, but plan to.

"Hospitals and large physician groups are increasingly adopting bundled payment options as a means to enhance control over the total path of care (quality and cost) and to create a much more patient-centered experience," said Marc Berg, KPMG's head of strategy and transformation for Healthcare and Life Sciences. "Based on our study, 58 percent of providers say they are generating more than 15 percent of their revenues from risk-based methods, such as bundling. We expect those numbers to grow further as providers see how bundling can strengthen relations with physician groups and take steps toward becoming preferred partners with the health plans."

Berg added that the current CMS Bundled Payment program provides a unique opportunity for providers, who must act quickly to participate in the program. CMS's bundled payment deadline is April 18 to join models 2, 3 or 4.

Challenges in implementing bundled payments

Similar to the October survey results, 42 percent of providers identified aligning physicians and hospitals as the greatest challenge in establishing a bundled payment plan. This sentiment reflects a history of misalignment between physicians and hospitals payment methods and operational goals. Nearly a third of respondents (32 percent) felt control of expenditures throughout the bundle posed the biggest challenge; while 16 percent believed the ability to harness performance information across the organization as the most significant barrier.

Just as they were in KPMG's October poll, providers were almost equally split when asked about the key components of bundled payment strategies. Thirty percent indicated that the ability to harness and manage big data would lead to success. Twenty-eight percent felt providing resources for program design, administration, and provider contracting were necessary. Another 27 percent cited commitment from top leaders as critical. Fifteen percent believed an open mind to new ideas was essential.

"We are seeing a convergence in the market happening where all players -- life sciences, payers, providers -- are changing their business model to create value for consumers," concluded Berg. "With bundle options, such as those offered by CMS and private-payer bundles, hospitals can reduce unwarranted admissions and readmissions, decrease lengths of stay, improve cost-effective prescribing and promote volume growth by increasing market share."

About the survey

KPMG LLP conducted a webcast on March 26, 2014 and included a series of survey questions pertaining to bundled payments. Responses were gathered from 140 healthcare providers, mostly affiliated with hospitals and health systems, large physician groups and suppliers, at the conclusion of the webcast. The same survey questions were posed to a similar audience in October of 2013. KPMG's care system redesign Webcast series has covered bundled payments and establishing a clinically integrated entity. Upcoming topics include data discovery, value-based contracting, and care coordination.

About KPMG Healthcare and Life Sciences

KPMG LLP is a leader in healthcare convergence, assisting organizations across the Healthcare and Life Science ecosystem to work together in new ways to transform the business of healthcare. With more than 1,500 U.S. partners and professionals supported by a global network of in 150 countries, we offer a market leading portfolio of tools and services focused on helping our clients adapt to regulatory change; design and implement new business models, and leverage technology, data and analytics to guide them on their path to convergence. Click here for more information on KPMG's thought leadership in healthcare and life sciences.


KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.

CONTACT: Manuel Goncalves KPMG LLP 201-307-7735 Twitter: @madgoncalvesSource:KPMG LLP