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BPCI Advanced: Three Questions for BPCI Advanced

DATE: October 9, 2017

The Programmatic Answers to Look for in the BPCI Advanced Announcement

Many current and potential bundled payment participants are eagerly awaiting the announcement from CMS of the “BPCI Advanced” program. CMS has planned this program for many months, but announcement of the details has apparently been stalled somewhere within the government. Many current Bundled Payments for Care Improvement (BPCI) participants wish to continue their participation in the program, and hospitals and physicians who did not participate in BPCI may now wish to join the BCPI Advanced program. The attractiveness of this program has yet to be seen, and it will depend on multiple factors. Here are the three biggest programmatic questions to ask once the changes are published:

1.   How are episodes defined?

In the current BPCI program, episodes are defined by the Diagnosis Related Group (DRG) on the “index” admission, in some cases stratified by the presence of a fracture diagnosis for major joint replacement episodes. In the CMS Oncology Care Model, episodes are identified by the presence of the cancer diagnosis code on primary physician claims. While CMS has not yet implemented outpatient-based episodes, it is possible that BPCI Advanced will include such episodes.

One issue of significant interest to hospitals is the ability to identify episode-eligible patients within the patient population if the episode definitions involve complex combinations of DRGs, diagnosis codes, and other factors. In the BPCI program it is relatively easy to identify participating patients, but as definitions become more complex, the difficulty of identifying these patients may increase.


2.   Who are the participants?

One of the biggest points of contention in BPCI has been the question of who “owns” the episodes—who is financially responsible for surpluses and deficits? In the BPCI program, both physicians and hospitals could participate in “Model 2” episodes, which are initiated by a hospital stay, while post-acute providers could participate in “Model 3”episodes that are initiated by post-acute service. In the Comprehensive Care for Joint Replacement (CJR) program, only hospitals participate, and hospitals were the only participants in the now-rescinded final rule for the Episode Payment Models (EPM) program.

Many observers believe that physicians will be able to own episodes in the BPCI Advanced program. This belief appears to originate from the fact that BPCI Advanced is expected to be similar to BPCI. In addition, participation in a BPCI program enhances the ability of physicians to actively participate in advanced alternative payment models (AAPM), which improve their financial opportunities under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

If physicians are allowed to own episodes in BCPI Advanced, an additional question is whether non-provider organizations can act as “awardee conveners,” as in BPCI.  An awardee convener assumes the financial risk for the episode and contracts with hospital or physician providers whose services initiate the episode. While most hospitals can absorb the financial risk of episodes in which they participate, many physician groups do not have the financial resources to withstand the significant variations in surplus and deficit that can occur in many episodes; therefore, the convener creates a financial buffer between the physician and the actual financial results of the episode.

Finally, will a “Model 3” exist to allow participation by post-acute providers? Many post-acute providers in BPCI to may wish to continue participation in bundled payment initiatives, and this ability will be predicated upon allowing such providers to initiate episodes.


3.   How are targets established, and what are the effects for each provider?

Potential participants need to know how episode cost targets are established, from which surplus and deficit are derived. CMS has used two primary approaches to establishing targets in bundled payment programs: those based on a participant’s historical costs during a baseline period, and those based on the episode costs of other providers within a geographic region.

Historically-based targets reward lowering cost, while regional targets reward existing cost-efficiency; providers with historically high costs prefer historically-based targets, while those who are already cost-efficient prefer regional targets. The BPCI program used entirely historical targets, while the CJR program transitions from primarily historical targets to entirely regional targets throughout the five-year participation period. Since BPCI Advanced is expected to be voluntary, the derivation of targets will significantly affect the types of providers who will choose to participate.

There is plenty of evidence that bundled payments can work effectively—and we remain optimistic that revising them through BPCI Advanced can help more providers deliver care more effectively to their patients, while reducing costs. However, since the full impact of the shift has yet to be seen, be sure to keep these questions in mind when the new policies are released by CMS.

This article was developed in collaboration with Singletrack Analytics.  Please be sure to follow DataGen on LinkedIn for more information about BPCI Advanced and to read part two of our BPCI Advanced series.

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