The Centers for Medicare & Medicaid Services (CMS) has announced that nearly 1,300 hospitals and physician group practices have signed agreements with the federal agency to participate in the Administration’s Bundled Payments for Care Improvement—Advanced (BPCI Advanced) model.
The participating entities will receive bundled payments for certain episodes of care as an alternative to fee-for-service payments that reward only the volume of care delivered.
According to CMS, the model participants include 832 acute care hospitals and 715 physician group practices—a total of 1,547 Medicare providers and suppliers, located in 49 states plus Washington, D.C. and Puerto Rico. Of note, BPCI Advanced qualifies as an Advanced Alternative Payment Model (Advanced APM) under MACRA, so participating providers can be exempted from the reporting requirements associated with the Merit-Based Incentive Payment System (MIPS).
BPCI Advanced will initially include 32 bundled clinical episodes—29 inpatient and three outpatient. Currently, the top three clinical episodes selected by participants are: major joint replacement of the lower extremity, congestive heart failure, and sepsis, according to CMS.
Back in January, CMS announced the launch of the voluntary BPCI Advanced model, noting that it “builds on the earlier success of bundled payment models and is an important step in the move away from fee-for-service and towards paying for value.” CMS Administrator Seema Verma stated yesterday in the announcement of the model’s participants that “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.”
Verma added, “The Bundled Payments for Care Improvement – Advanced model was the Trump Administration’s first Advanced Alternative Payment Model, and today we are proud to announce robust participation. 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.”
Last year, CMS officially finalized a rule that cancelled mandatory hip fracture and cardiac bundled payment models. Verma has said in the past that she doesn’t think bundled payment models should be mandatory, a sentiment that some industry experts wholeheartedly agree with.
In contrast to the traditional fee-for-service payment system, in this new episode payment model, participants can earn an additional payment if all expenditures for a beneficiary’s episode of care are less than a spending target, which factors in measures of quality. Conversely, if the expenditures exceed the target price, the participant must repay money to Medicare.
How Did BPCI Fare?
The original BPCI initiative ended on September 30, and BPCI Advanced picks up where it left off, starting on October 1, and running through the end of 2023. This prior initiative included three models that tested whether linking payments for all providers that furnish Medicare-covered items and services during an episode of care related to an inpatient hospitalization can reduce Medicare expenditures while maintaining or improving quality of care. Model 2 episodes begin with a hospital admission and extend for up to 90 days; Model 3 episodes begin with the initiation of post-acute care following a hospital admission and extend for up to 90 days; and Model 4 episodes begin with a hospital admission and continue for 30 days.
According to CMS, the evaluation from these models revealed that BPCI Models 2 and 3 reduced Medicare fee-for-service payments for the majority of clinical episodes evaluated while maintaining the quality of care for Medicare beneficiaries. It also should be noted that spanning over the two years that participants were able to join the risk-bearing phase of the initiative, 22 percent of Model 2 participants, 33 percent of Model 3, and 78 percent of Model 4 participants ended up withdrawing. Most BPCI participants were in eithers Model 2 or 3; in 2017, just five hospitals belonged in Model 4, in which Medicare makes a prospective payment for the episode.
CMS noted in its report of the BPCI initiative, “Despite these encouraging results, Medicare experienced net losses under BPCI after taking into account reconciliation payments to participants. Technical implementation issues, including the specification of appropriate target prices, contributed to these net losses. We are optimistic that Medicare will achieve net savings under a new episode- based Advanced Alternative Payment Model, BPCI Advanced, because it addresses the challenges BPCI experienced.”
To this point, a report from the Lewin Group, a healthcare consulting firm, found that in the most popular track of BPCI, Model 2, Medicare lost more than $200 million ($268 per episode) from 2013 to 2016. In Model 3, Medicare lost slightly more than $85 million ($921 per episode) over that same time period, according to the report.
Moving toward BPCI Advanced, the federal agency points out some key differences between the original model and the new one, such as:
- BPCI Advanced offers bundled payments for additional clinical episodes beyond those that were included in BPCI, including, for the first time, outpatient episodes.
- BPCI Advanced provides participants with preliminary target prices before the start of each model year to allow for more effective planning. The target prices are the amount CMS will pay for episodes of care under the model.
- BPCI Advanced qualifies as an Advanced APM and is eligible to earn the 5-percent bonus in the Quality Payment Program.
Keely Macmillan, the general manager of BPCI Advanced for Archway Health, a Massachusetts-based company that helps providers get started in bundled payment programs, says she is happy with the level of participation so far. She did add that one thing her company noticed immediately, regarding the participant list, was the popularity of joint replacements and cardiac bundles. “Research coming out in the last few months has proven that these bundles do particularly well, and we’re excited to help our participants and see others industrywide continue to drive improvement in the new program,” she says.
Meanwhile, Clay Richards, president and CEO of naviHealth, a post-acute care management company based in Tennessee, and which is a BPCI convener, notes that its hospital and health system partners saved more than 8 percent, or approximately $2,000 per episode, which translates to more than $83 million in the BPCI initiative. “With the increase in BPCI Advanced participation, we expect the impact to be even greater,” says Richards.
