CMS weighing changes to target price methodology
BPCI Advanced’s goal is to help practices more effectively deliver high-quality care at lower costs. But, certain policy changes come with unintended confounding factors that make it harder for participants to realize that goal. To ensure the continued viability of BPCI Advanced and other bundled payment programs, CMS has to find a resolution.
To accomplish that, CMS recently announced that it is considering making changes to the BPCI Advanced target price methodology, and is seeking input from key industry stakeholders. CMS is proposing a retrospective trend adjustment (RTA), which would update benchmark prices to reflect current episode spending.
While it’s clear that there’s a real need to adjust target prices to account for changes in Medicare policy, it’s important to consider that the adjustment should reflect the change in episode spending as a result of Medicare policy, and not as a result of improvements in practices’ processes.
Our analysts have reviewed CMS’s proposal, and believe that the proposed RTA raises two concerns:
- A retrospective target will create fluctuations in existing targets, making it harder to predict how likely a participant is to succeed in any given episode at initial reconciliation and in following true-ups.
- Making sure the RTA captures the change in policy and not intervention improvements. If a peer group has a greater percentage of hospitals participating in BPCI Advanced or CJR, that peer group’s RTA may reduce targets due to practice intervention more than it would for other peer groups.
An RTA is a good approach to dealing with the issue, but we need greater insight into how the variations of the method differ—for example, in a national vs. peer group RTA. Setting a cap on the RTA similar to what was done in the original BPCI program would help reduce major swings in target pricing from one performance period to the next, reducing some of the potential volatility of the proposed change.
We are currently working with our colleagues at the Association of American Medical Colleges on a more in-depth analysis. In the coming days, we will share an update on their recommendations to CMS’s proposed change. In the meantime, to learn more about other issues impacting BPCI Advanced and other alternative payment models, visit our BPCI Advanced resource page.