The biggest challenge is that there’s a fair amount of work to redesign care before the program launch on Oct. 1, but the application due on March 12 is less intensive.

The Centers for Medicare & Medicaid Services (CMS) Bundled Payments for Care Improvement (BPCI) Advanced is a voluntary episode-based payment model that helps providers invest in clinical care innovation to improve quality and reduce cost. The program follows in the footsteps of BCPI 1.0 that included four broadly defined models of care. Applications to participate in BPCI Advanced are due March 12 and the program is set to launch on Oct. 1, 2018.

BPCI Advanced presents hospitals with an opportunity to improve care quality, align physicians to reduce costs, and focus on patient-centered care, while potentially gaining revenue, says Clay Richards, CEO of naviHealth. Richards recently shared why and how hospitals can leverage this new program to improve outcomes and generate savings.

What are some of the most important differences between BPCI 1.0 and BPCI Advanced?

Richards: One of the biggest differences pertains to the target price. In BPCI 1.0, target prices were provided at the time of reconciliation, which was often six to nine months after completion of the performance period. During reconciliation, CMS also applied an adjustment to account for national trend factors. Depending on the size of the organization, this adjustment significantly affected the savings or loss, making it difficult to plan ahead from revenue and cost-sharing perspectives. 

With BPCI Advanced, there’s more stability and predictability because a preliminary target price is set prospectively before the start of each model year. By having accurate pricing up front, providers will be better informed and equipped to participate in more episodes. 

Another difference is that post-acute care providers, such as long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health agencies, are no longer able to initiate episodes. Instead, episode initiators include only acute care hospitals, physician group practices, or conveners—partner organizations that facilitate coordination and participation for multiple entities. This streamlined approach will help from a clarity standpoint in terms of what entity “owns” the episode. 

In BPCI 1.0, hospitals and post-acute care providers treating the same patient may have vied for the same episode, though precedence policies determined which entity would be the initiator. While BPCI Advanced discontinues this practice for post-acute care providers, it still presents a unique opportunity to be part of the care continuum through collaboration and the formation and management of high-performing networks. Whatever the arrangement, we’ve seen that providers are committed to providing better patient outcomes and quality. 

Other differences in the models include the fact that BPCI Advanced episodes are triggered by one of three outpatient clinical episodes or one of 29 inpatient hospital stay episodes. BCPI 1.0 included 48 inpatient episodes and no outpatient episodes. The episode itself is now defined as the anchor inpatient stay (or outpatient procedure) plus 90 days post-discharge (including hospice care). In BPCI 1.0, the episode began with the anchor stay but extended either 30, 60, or 90 days post-discharge. In addition, BPCI Advanced requires participants to report on certain quality measures, including process and outcomes measures, that are tied to payment. Finally, as of Jan. 1, 2019, BPCI Advanced also qualifies as an Advanced Alternative Payment Model (Advanced APM) under MACRA.

Are there any particular challenges posed by BPCI Advanced versus BPCI 1.0 for revenue cycle departments that are responsible for collecting patient payments for the bundles?

Richards: We’re still waiting for more details from CMS around some of the financial components in BPCI Advanced, such as target pricing methodology, but we expect reconciliations to be semi-annual rather than quarterly, which would be a major shift.

Revenue cycle departments should be mindful of incurring operating expenses—staff, tools, analytics, etc.—before confirming corresponding cash flow generation, even if the revenue comes a little later. However, if the target prices are up front and transparent in BPCI Advanced, it will make estimating and reporting gains and losses much more accurate.

How do hospitals benefit from participating in BPCI Advanced?

Richards: Hospitals that provide high-quality, low-cost care will be able to generate savings that essentially serve as a new revenue stream. As an Advanced APM, BPCI Advanced also helps incentivize physicians to reduce costs and earn MACRA bonuses.

With the addition of hospice services and broader inclusivity around Part B services, BPCI Advanced will drive the need for new or strengthened capabilities as well as partnerships with other providers in the healthcare ecosystem. Streamlining care delivery across primary care physicians, PAC providers, community-based health clinics, and hospice providers will help ensure the patient is supported throughout the journey.

Another benefit is that BPCI Advanced provides the funds to help providers invest in clinical care resources and care redesign to improve the patient experience—a goal that should be on every hospital executive’s radar because it helps differentiate providers in an increasingly competitive marketplace.

On average, how much did hospitals save through BPCI 1.0? And what can they expect with BPCI Advanced?

Richards: While we can’t speak for all hospitals, as a BPCI convener, our hospital and health system partners that participate in BPCI 1.0 have been able to generate more than 8 percent savings (translating to more than $2,000) per episode, mostly by focusing on cost containment and clinical care improvement in the post-discharge setting. This yields a total annual gross savings of more than $83 million across a BPCI portfolio of more than 40 of the available 48 episodes we support in the original model.

This is what we anticipate hospitals will see with BPCI Advanced as well, although the hurdle is a bit higher this time. In BPCI 1.0, CMS applied a 2 percent discount to the benchmark price, meaning episode initiators had to guarantee to CMS they’ll save at least 2 percent. They kept any savings generated beyond that amount. In BPCI Advanced, episode initiators must guarantee a 3 percent savings before they receive any funds.

What are the risks of participating in BPCI Advanced?

Richards: The biggest risk is that episode initiators are on the hook for up to 20 percent of the target price. This means that if they exceed the target price, they’re obligated to repay up to 20 percent of that price to CMS. This is similar to the way it works with CMS’s Next Generation Accountable Care Organization Model. Some providers have elected to work with conveners because these entities reduce downside risk by sharing in the repayment obligation.

What types of hospitals do you anticipate will participate in BPCI Advanced? Will there be any similarities among them?

Richards: Hospitals that participated in BPCI 1.0 will likely participate in the new program as well. However, we’ve also seen a tremendous interest from hospitals that didn’t participate in BPCI 1.0. This includes for-profit hospitals as well as large regional and academic medical centers. Smaller hospitals have also expressed interest; however, they may not have the up-front investment dollars necessary to make this work. We expect that many of these providers will participate in BPCI Advanced by joining forces with conveners that share in the risk and also bring data analytics and clinical care redesign expertise.

What should executives consider as they decide whether to participate in BPCI Advanced?

Richards: Healthcare executives need to get a sense of the potential scope of their bundled payments project. Healthcare finance leaders should complete an initial assessment to define the episodes of care and determine the potential incremental revenue they stand to gain by participating in the program. In our experience, high-volume, high-cost episodes that require post-acute services make for ideal candidates.

Executives should also analyze Medicare data—ideally over multiple years—to better understand historic utilization and cost patterns for specific episodes. Doing so enables organizations to more precisely identify areas to improve processes and care coordination as well as understand the potential financial and clinical impact of bundled payments.

In the approaching BPCI Advanced model, organizations considering participation should determine the assets required for successful care redesign. CMS wants participants to demonstrate organizational readiness to deliver on the care redesign they are proposing. This means participants will need to address care coordination, patient engagement, evidence-based medicine, and more, and think comprehensively and holistically about how to deliver patient care throughout a 90-day episode.

Executives should also understand their market context and know what physician groups, health systems, and other providers are, or will be, participating in similar value-based care arrangements such as ACOs, bundles, or other alternative payment models. This is critical to understand market dynamics and to identify the best opportunities to align and partner. In addition, there may be operational investment and payment synergies, such as MACRA, and other initiatives to leverage through participation in bundled payments.

Lastlyand perhaps most importantly—executives should consider whether their organizations are equipped to take on the financial risk involved either alone or with a convener partner. While most providers use the traditional fee-for-service system, the new value-based care models require providers to take responsibility for patients for a longer period of time.

What do you anticipate will be the biggest challenge with BPCI Advanced?

Richards: The biggest challenge is that there’s a relatively short timeframe to prepare. The program launches on Oct. 1, and there’s a fair amount of work that will be required to redesign care that leads to cost savings.

However, the upcoming deadline to apply on March 12 doesn’t require too much work up front, and there’s no risk to apply. If an organization is selected and decides not to participate in BPCI Advanced, there’s no penalty or repercussion. While it seems like a challenge, it’s a manageable process, especially with the right planning and partners in place.

What are some lessons learned from BPCI 1.0 that hospitals can apply in BPCI Advanced?

Richards: First, hospitals shouldn’t underestimate the importance of data analytics. They need the ability to compare their data against national and regional benchmarks to identify high-cost areas that can benefit from clinical interventions and care redesign. This includes drilling into the data not only by episode but also by individual physician. The data is where hospitals start to create the game plan of how they’ll be successful in this program.

Second, hospital leadership must commit to change management and be willing to think outside the box in terms of care improvement. Design each episode of care around the patient. This requires constant attention to individualized care plans and post-discharge planning with the goal of returning patients to the highest functional status while preventing unnecessary complications and readmissions.

Third, hospital leadership must understand that process improvement takes time. The idea that hospitals can sign up for this program and make money immediately isn’t true. They need to commit to high quality value-based care, and they need to evolve as BPCI Advanced continues to change. Our experience is that hospitals continue to see a greater return on investment with each quarter of participation. This is exciting for hospitals that generate financial savings—and for patients who benefit from higher-quality care.


Lisa A. Eramo is a freelance writer based in Rhode Island.

Interviewed for this article:

Clay Richards is CEO of naviHealth, a Cardinal Health Company.


Publication Date: Wednesday, February 21, 2018