New data on the precursor voluntary bundled payment model found it did not lower overall Medicare spending.


Oct. 9—The latest Medicare bundled payment model gained 50 percent more provider organizations than its predecessor.

The Bundled Payments for Care Improvement Advanced (BPCI Advanced) model launched Oct. 1 with 832 acute care hospitals and 715 physician group practices—totaling 1,547 Medicare providers and suppliers—the Centers for Medicare & Medicaid Services (CMS) announced Oct. 9.

The voluntary payment model, in which participating entities will receive bundled payments for certain episodes of care as an alternative to fee-for-service payments, was half again as large as the original Bundled Payments for Care Improvement (BPCI) initiative.

As of July 1, 2018, BPCI had 1,025 participants in its Phase 2, including 255 acute care hospitals, 485 skilled nursing facilities, and 192 physician group practices, according to a CMS tally.

“To accelerate the value-based transformation of America’s healthcare system, we must offer a range of new payment models so providers can choose the approach that works best for them,” Seema Verma, administrator of CMS, said in a release. “We look forward to launching additional models that will provide an off-ramp to the inefficient fee-for-service system and improve quality and reduce costs for our beneficiaries.”

Under BPCI Advanced, participants can earn additional payment if expenditures for a beneficiary’s episode of care amount to less than a target, which includes measures of quality. Conversely, if the expenditures exceed the target price, the participant must repay money to Medicare.

The larger participation did not surprise Harrison Frist, national president of operations for naviHealth, which advises hospitals on models. The company’s client hospitals that were in the precursor bundled payment model all joined, as did a larger number that were not in BPCI.

“This time around you see an uptick in participation because health systems and providers understand we’re making that shift to value-based care; that’s a reality now and not a matter of if but when,” Frist said in an interview. 

Participation especially increased among national health systems and so-called super regional health systems—both for-profit and not-for-profit.

Decision Points

Key components of BPCI Advanced included:

  • Offering bundled payments for clinical episodes beyond those that were featured in BPCI— including, for the first time, outpatient episodes—with the overall number totaling 32
  • Providing participants with preliminary target prices before the start of each model year to allow for more effective planning
  • Allowing participating physicians to qualify for the advanced alternative payment model (APM) track of the Medicare Access and CHIP Reauthorization Act (MACRA)

The top three clinical episodes selected by participants were major joint replacement of the lower extremity, congestive heart failure, and sepsis. BPCI Advanced runs through Dec. 31, 2023.

Hospitals and health systems used extensive data analysis to help them decide whether they had opportunities to succeed under BPCI Advanced through care redesign, Frist said.

“The primary driver of participation was scale as well as location or geography and where the variation and opportunity for care redesign” were, Frist said.

Additionally, that BPCI Advanced—unlike BPCI—qualified as an APM under MACRA was “a significant driver” of health systems’ decisions to join the new model, Frist said. APM participants are exempt from reporting requirements and the potential for steep payment cuts under the Merit-based Incentive Payment System (MIPS)—the other MACRA payment arm.

“It did increase [participation] and help push some systems across the finish line,” Frist said. “It was one of a handful of factors.”

Participating providers will be given the chance to leave BPCI Advanced in the spring after having reviewed their experience. That option likely helped attract some health systems to the program, Frist said, but he doubted many will end up leaving.

BPCI Results

CMS also released the fifth evaluation report for BPCI Models 2-4, which ended Sept. 30.

“Under the BPCI initiative, Medicare payments declined for most clinical episodes and over half of the relative payment reductions were statistically significant,” stated the report by the Lewin Group.

The declines were primarily due to relative reductions in the use of post-acute care (PAC), the report found.

Although BPCI was associated with a decline in episode payments, after considering the reconciliation payments made to participants, BPCI did not result in savings to the Medicare program, the Lewin Group noted.

CMS described the finding as “encouraging.”

“CMS designed the BPCI Advanced model taking into account evaluation results and lessons learned from other Innovation Center models, industry experience with bundled payment, and stakeholder input from healthcare providers at acute care hospitals, physician group practices, and other providers and suppliers,” the agency stated in the release.

Among other findings, BPCI participants did not change their market share of discharges or reduce the number of PAC providers to which patients were discharged under the initiative. However, participants increased the share of patients who were discharged to a skilled nursing facility with a high star rating.

Across the 67 episodes that were analyzed among different BPCI models, participants, and clinical episodes, payments declined for 50 and the change was statistically significant for 27.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, October 10, 2018