John HarrisThe ultimate impact of an innovative payment method is often shaped by technical details. This pattern is what is playing out with CMS's Bundled Payment for Care Improvement (BPCI) initiative offered by the Center for Medicare and Medicaid Innovation (CMMI).

Even if you are not applying for this program, we thought you might be interested in what we are learning as we assist others with the application process. Our experiences may be instructive for working with CMS on other programs and for considering commercial bundled payment initiatives.

Under BPCI, a typical 90-day bundle appears to require the provider to offer a 2 percent discount in order to retain any savings generated. However, the effective discount could be significantly higher depending on technical factors.

Idette ElizondoBase Year Change. Although applicants have been evaluating bundles based on 2009 data, it appears that CMMI may switch to 2011 data for the baseline. If CMMI does so, applicants will no longer get credit for progress made between 2009 and 2011. The benchmarks, including readmission targets, will be harder to reach. In effect, applicants will be offering a higher discount.

Low Volume DRGs. When an individual hospital has too few patients in a DRG to use its own cost data to set a benchmark, CMMI was planning to use an alternate approach that weighs regional experience more heavily than applicant experience. So if a hospital starts out with higher costs than average for its region, it will be harder for them to achieve savings compared wiith this lower benchmark. In effect, the discount would be higher.

Technical factors can also have the opposite effect, leading to greater opportunity, and the ability to virtually "lock in" positive results.

Applicants must have selected the clinical conditions for which they want to receive bundled payment from CMMI by the posting date for this blog post, Dec. 5, 2012, and the pilot will begin in January. However, applicants can still exit the program before the July 1, 2013 start. With that timing, applicants can move forward, with one eye looking ahead and one eye on the emergency exit.

John is a principal, DGA Partners, Bala Cynwyd, Pa.

Idette is a manager, DGA Partners, Bala Cynwyd, Pa.


Publication Date: Wednesday, December 05, 2012