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On Demand Webinar | Intermediate | Medicare Payment and Reimbursement
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Blog | Medicare Payment and Reimbursement

Limited BPCI savings seen with joint replacement bundles

Blog | Medicare Payment and Reimbursement

Limited BPCI savings seen with joint replacement bundles

  • An HFMA news item reports that recent research published in Health Affairs found more than half of the savings related to Medicare’s lower joint replacement bundle is related to patient selection bias and not care redesign.
  • Although CMS analysis of the Bundled Payments for Care Improvement hip and knee replacement bundles found they reduced spending by 3.9%, once adjustments were made, the actual savings was more like 1.6%, according to same study quoted in the HFMA article.
  • Before and after the model went live, HFMA, along with others, raised the issue about the BPCI episodes using only the MS-DRG as a risk adjuster with CMS.

HFMA Senior Writer and Editor Rich Daly’s Jan. 7 article reports that recent research published in Health Affairs found more than half of the savings related to Medicare’s most widely implemented and successful financial bundle — lower joint replacements — is related to patient selection bias and not care redesign.

While initial CMS analysis of the Bundled Payments for Care Improvement (BPCI) hip and knee replacement bundles found they reduced spending by 3.9% — once adjusted for changes in the complexity of the patients undergoing the procedure in the benchmark versus performance period in participating hospitals — the actual savings was more like 1.6%.

Takeaway

This data raises a couple of thoughts for me.

1. Inadequate Risk Adjustment Wasn’t A Secret: The BPCI episodes used only the MS-DRG as a risk adjuster. HFMA, along with others, raised this as an issue to CMS in a comment letter before and another comment letter after the model went live. We recommended these changes to CMS to encourage safety net providers to participate and create a level playing field that would not encourage lemon dropping or cherry picking. And it would have had the benefit of also protecting the trust fund from paying phantom savings.

The next iteration of Medicare Bundled Payments — BPCI-A — has a more sophisticated pricing model, which incorporates patient complexity into the risk adjustment mechanism using HCCs. That will probably reduce Medicare’s exposure to patient selection issues, however the model still doesn’t have an explicit adjuster for socioeconomic factors like dual status which may still create some opportunity to cherry pick or lemon drop.

2. The next tranche of cost savings: We’re hearing from some participants in BPCI who migrated into BPCI-A that they’re worried about where they’re going to find the next round of savings given the changes in risk adjustment and the fact that their successes in BPCI (mostly from providing post-acute care in the most clinically appropriate setting, resulting in reductions in unnecessary skilled nursing facility utilization and increases in the use of home health) are now baked into their BPCI-A benchmarks. If the model remains voluntary and participants are unable to generate savings to share with their partnering physicians and/or they start having to repay CMS, you have to wonder how long they’ll continue participating unless CMS can provide some mechanism to encourage fee-for-service beneficiaries to choose providers who are participating in the program. This recommendation is one that HFMA and others have consistently made to CMS in comments on a range of alternative payment models. 

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

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