Uncertain hospitals may benefit from applying to the program on a tentative basis so that they can review their CMS-provided performance data, advisers say.


Jan. 10—Hospital participation in a new voluntary bundled payment program is expected to exceed that of any previous models, but the new program may not be right for every organization.

The Centers for Medicare & Medicaid Services (CMS) issued long-anticipated rules for the new model, Bundled Payments for Care Improvement Advanced (BPCI Advanced).

The model will allow participating organizations to earn additional payment if total spending on a beneficiary’s episode of care comes in under a spending target that factors in quality. Organizations that exceed targets will face payment cuts.

The new model will offer bundled pay for 32 clinical episodes, such as major joint replacement of the lower extremity (inpatient) and percutaneous coronary intervention (inpatient or outpatient), according to a CMS release.

The new model generally drew positive reactions from the hospital industry and bundled payment experts.

“To us, this signals that the administration sees value in these programs,” said Darcie Hurteau, senior director of informatics for DataGen, a healthcare data analytics and policy firm that advises about 200 providers in various CMS payment models.

“This is another positive step forward for bundled payments being part of Medicare's permanent payment policy, and we expect it will fuel the continued expansion of bundled payment methodology into commercial, Medicaid and self-insured markets,” said Chris Garcia, CEO of Remedy Partners, which is the largest awardee convener under the current BPCI program.

The new model also included some key improvements over the precursor BPCI program, which is a five-year pilot scheduled to conclude in September 2018. Improvements include the use of a prospective price that will be paid for the bundle and set the preceding year, versus the earlier practice in which the price paid was changed on a quarterly basis.

“You’ll see a lot more people looking to participate because of some of the pricing stability,” said Clay Richards, CEO of naviHealth. “They kept a lot of the parts that are working in the current program, and they tried to listen to people like us about some of the changes that we and our provider partners have been asking for.”

Richards expected significantly more providers to sign up for the new model compared with the existing BPCI program, in which 450 have taken part.

Other positive signs are the types of episodes that were included and the addition of outpatient procedures, Hurteau said.

“There’s been a lot of experience in these types of programs—even with [accountable care organizations]; people are getting much more comfortable with the idea of taking risk,” Hurteau said. “So I think there will be a significant interest in this program.”  

Physician Provisions

Among the provisions that will make the new program attractive, according to industry advisers, is that BPCI Advanced will qualify as an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The provision will encourage physicians to participate because then they can avoid MACRA’s Merit-based Incentive Payment System payment track, which carries heavy data-reporting burdens and potential annual payment cuts of up to 9 percent.

“There was a lot of interest, especially from health systems, around that aspect—because of the physician provision,” Richards said.

Another notable feature of the new model is that it restricts the central risk-taking role, designated as the initiator, to hospitals and physician group practices (PGPs). The current BPCI program allowed bundles led by hospitals, PGPs, and post-acute care (PAC) providers.

The major problem for PAC-led models was confusion for patients who were being cared for by BPCI providers, Richards said in an interview. He noted that initiators can still partner in gainsharing arrangements with PAC providers under the new model.

“The post-acute episode really starts when the patient is in the hospital, not when they are admitted to the inpatient rehab or skilled nursing facility,” Richards said. “The benefit is that you are measuring the episode in the same way that the patient experience follows.”

Hospital Considerations

A potential complication of note for hospitals that are considering participation in the new model is its elimination of the risk phase-in period of earlier models.

“It can be a significant lift to get programs going for some organizations,” Hurteau said. “And having that six months or a year of no downside risk allows them to really get their programs up and running.”

That provision could dissuade some hospitals from participating, she said.

Richards expects hospitals with bundled payment experience to perform well right off the bat, while inexperienced hospitals will look to convener partnerships to initially share or offload the risk. Awardee conveners are defined as the entities that would bear financial risk and receive payments from CMS.

“Absent a convener, it will be more challenging,” Richards said.

A good strategy for uncertain hospitals might entail asking CMS for their past-performance data so they can evaluate their opportunities for improvement, Hurteau said.

“You won’t know what the data can show you until you actually have it,” Hurteau said.

Hospital performance in BPCI Advanced is likely to vary based on individual characteristics—such as volume in the specific episodes of care and position in the market—according to advisers, with no particular category of hospital automatically at an advantage.

“People may have a perception of what goes on after the patient leaves their hospital, and then the data shows something very different—either positive or negative,” Hurteau said. “But you won’t know that until you actually see the data.”

The BPCI Advanced model performance period starts on Oct. 1, 2018, and runs through Dec. 31, 2023. Information on the model and its requirements is available at the dedicated CMS webpage, as are applications.

The CMS Innovation Center plans a Jan. 30 open forum to address questions.


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

Publication Date: Wednesday, January 10, 2018