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Five recommendations for CMS: Revisions and recommendations to CMS’ proposed changes to BPCI-Advanced target price methodology

By: John Kalamaras, Theresa Dreyer, Erin Hahn and Jonathan Pearce

DATE: 07/28/2020

As DataGen discussed in our recent blog post, “A Change for BPCI Advanced?,” CMS has proposed modifications to its target price methodology to adjust for unforeseen impacts from other policy changes. We noted that we believe a retrospective target adjustment is a good approach, but it should be implemented in ways that increase predictability for participants.

This situation came to light when CMS noted that the Bundled Payments for Care Improvement Advanced program financial results were not aligned with the agency’s expectations. CMS determined that changes to its own policies resulted in participant outcomes that were not accounted for by the CMS prospective target methodology. While these issues were creating positive financial results for participants, there was no guarantee that future results would follow suit—especially in light of COVID-19’s impact on the healthcare system and CMS’ policy changes developed in response to the pandemic.

To improve the precision of the BPCI-Advanced financial results, CMS is considering introducing a new component into the target price calculation that would retroactively modify targets to properly reflect what the policy looked like at the time, as opposed to what was projected.

DataGen and our colleagues at the Association of American Medical Colleges and Singletrack Analytics believe that the BPCI-Advanced methodology should place participants at risk only for factors that are within their control and minimize the effect of random variations that they cannot directly manage.

Assuming that the prospective target methodology cannot be modified to reduce these uncontrollable risks, we believe that adding a retrospective component to the target that would adjust for policy changes and other external factors is the right move—with a few caveats.

To that end, DataGen and our colleagues analyzed the proposed changes and developed five recommendations, as detailed in AAMC’s recent letter to CMS:

  1. Implement a retrospective trend adjustment to account for actual versus predicted spending. We recommend that CMS supplement the existing prospective methodology by incorporating an RTA, which would more accurately set targets by controlling for unrelated policy changes or coding guidance.
  2. Limit variability between peer groups by either applying the RTA based on the national trend or based on a combination of peer groups. To create a more representative and reliable sample, we recommend that CMS test the application of the RTA based on a national comparison group or a combination of peer groups, rather than applying the RTA to individual peer groups.
  3. Institute a cap for the proposed RTA at ±3.5%, comparable to the methodology in the original BPCI model. We recommend that CMS increase predictability of target prices for participants by applying a ±3.5% cap on the proposed RTA.
  4. Provide methodological details and data at least three months in advance of the episode selection period for Model Year 4, which aligns with calendar year 2021. CMS should provide participants with all necessary data and methodological specifications at least three months prior to the MY4 episode selection deadline to allow providers to make informed decisions on continued participation. In addition, to avoid introducing additional uncertainty during the COVID-19 pandemic, CMS should not implement any methodological changes prior to MY4.
  5. Extend the period for submitting feedback on the possible application of an RTA. CMS should provide participants two additional weeks to submit feedback to allow for thorough consideration of the potential changes.

As DataGen’s John Kalamaras recently discussed with the Healthcare Financial Management Association, overall, we welcome CMSs intention to implement a more accurate methodology to set target prices fairly while continuing to reward participants for improving care quality and patient access. And, since the prospective methodology is driven partly by policy changes and other factors out of participants’ control, there is a very real concern that the current methodology could inappropriately penalize participants in future performance periods.

DataGen, AAMC and Singletrack Analytics share CMS’ belief that participants’ financial results should be driven by the quality of care they provide through the model. As such, the target price methodology should accurately account for outside factors such a policy changes and coding guidance to provide participants with a stabile target price. Doing that frees participants to focus on delivering high-quality patient care.

While we support the need for using an RTA to adjust the target prices, we believe the refinements summarized above will help create a satisfactory level of predictability in target prices for participants and help BPCI-Advanced continue to promote care transformation.