Unpacking CMS Shadow Bundles

Background | Comprehensive Specialty Strategy for Bundled Payments

As part of the value-based care initiatives dominating healthcare policy, Centers for Medicare and Medicaid Services (CMS) has announced a goal for every one of its Original Medicare beneficiaries to establish accountable, long-term care by the year 2030. With this they hope to minimize fragmented ambulatory care that leads to low-value care delivery experienced by nearly 40% of Medicare fee-for-service beneficiaries.

Additionally, many Medicare and Medicaid patients have limited access to specialty care due to lack of specialist coverage, high out-of-pocket rates, and limited coverage of telehealth medicine. Many payment model strategies have been tested and employed for acute inpatient and hospital outpatient, including the Bundled Payments for Care Improvement (BCPI) Model and the Comprehensive Care for Joint Replacement (CJR) Model. However, the introduction of the new comprehensive specialty strategy in 2022 aimed to integrate specialty care into longitudinal and acute care delivery.

Shadow Bundles: An Overview

One bundled payment model introduced within the comprehensive specialty strategy is shadow bundling. Shadow bundles are reimbursement arrangements that are unique to a procedural or condition-specific episode of care, beginning at admission or date of surgery, and extending through the 90-day postoperative or post-discharge period. In February 2024, the Centers for Medicare & Medicaid Services (CMS) started giving Medicare Shared Savings Program (MSSP) and Realizing Equity, Access, and Community Health (REACH) Accountable Care Organizations (ACOs) shadow bundle reporting on 29 inpatient, three outpatient, and two multi-setting episodes based on a modified version of the BPCI Advanced program that presents consolidated cost and quality data of specialists engaged with ACOs. This serves as a benchmark or reference for costing and the evaluation of specialist performance.

Shadow bundle data is released to ACOs in three primary forms at various time intervals: (1) Monthly episode-level files for all shadow bundles initiated by the ACOs beneficiaries, (2) Quarterly summary files of monthly claims and episode data files, and (3) annual benchmark prices by clinical episode.

Strengths and Weaknesses of Shadow Bundles

Shadow bundles create a culture of transparency surrounding quality and cost of care that can motivate ACOs and specialists alike. High-value specialists can be easily identified through the unblinded data shared from shadow bundling, incentivizing value-based practices among specialists. Furthermore, price transparency can lead to collaboration between specialists and ACOs on value-based care efforts with the opportunity for reducing costs, gainsharing, and further engagement of specialists.

Shadow bundles are limited to patients that experienced an acute event (i.e. hospital admission or surgery) treated at a hospital. Due to this limitation, the data presented may disproportionately reflect a more ill patient population, as many surgeries are performed at ambulatory surgery centers. Preoperative optimization efforts, labs, imaging, and other preliminary treatment modalities are not taken into account. Additionally, specialists may not have control over all decisions and management performed during the episode of care, thus limiting the application of specialist-specific analyses.

Sources |  The CMS Innovation Center’s Strategy to Support Person-Centered, Value-based Specialty Care |  Shadow Bundles: A Big Opportunity for MSSP and REACH ACOs | Reshape Your ACO Using Shadow Bundles