CMS recently announced a new version of its bundled payments program, with more incentives to participate. Doctors can qualify for higher payments under MACRA, an advantage for hospitals looking to affiliate with physician groups.
A new bundled payments program should draw more hospitals in with a structure that limits potential financial loss while increasing the potential gains. The program follows promises by the government that it would incentivize both highly efficient and less-efficient providers with its new pricing methodology.
The new Bundled Payments for Care Improvement Advanced (BPCI Advanced) program from the Centers for Medicare & Medicaid Services is a second-generation version of the BPCI program. BPCI Advanced is a voluntary program that offers a single retrospective bundled payment covering services within a 90-day clinical episode.
Program overview
A clinical episode begins with an inpatient admission for an inpatient procedure or the start of the outpatient procedure, continuing for 90 days after discharge or the procedure.
Participants may participate in up to 29 inpatient clinical episodes and three outpatient clinical episodes (percutaneous coronary intervention, cardiac defibrillator, and back and neck except spinal fusion). CMS provides target prices in advance, measured against the total Medicare fee-for-service spending and services during the clinical episodes.
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CMS has refined the program to make bundled payments more appealing to healthcare providers, says Keely Macmillan, general manager of BPCI with Archway Health, which assists healthcare providers with bundled payments.
"Providers should be encouraged about the new BPCI Advanced program, as it provides more opportunities for upside revenue. CMS will now provide a limit to how much downside a provider can be responsible for by providing a 20% stop-loss of their total program size," she says. "Full target pricing details are still forthcoming from CMS, but we expect the new pricing model to be more inclusive."
BPCI Advanced also comes with a new Episode Initiator focus. BPCI Advanced will qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program adopted as part of the Medicare Access and CHIP Reauthorization Act (MACRA). Physicians participating in BPCI Advanced may earn MACRA's Advanced APM incentive payments because they take on financial risk.
"CMS is prioritizing physicians this time around, and BPCI Advanced now provides the first chance for specialty providers to qualify for Advanced APMs under the MACRA Quality Payment Program," Macmillan says. "In the original BPCI model, specialists proved to be very successful at lowering the costs per episode and improving outcomes for patients."
A revenue opportunity
The new BPCI structure means that, more than ever, CFOs should look at bundling as a revenue opportunity, says Clay Richards, CEO of naviHealth, a Cardinal Health company that assists hospitals with BPCI.
"We think this is a pretty significant revenue opportunity over the next several years. This is a very positive, strong signal from the administration that there is going to be an emphasis on value-based care and a shift away from fee-for-service," Richards says. "Hospitals are going to continue to be nudged in the direction of getting paid for value rather than getting fees for service."
BPCI Advanced participants can be "conveners" or "non-conveners." Conveners are companies such as Archway Health and naviHealth, which take on risk for downstream entities as they facilitate coordination among episode initiators. Non-conveners are acute-care hospitals or physician group practices that initiate episodes but do not take risk for downstream entities.
"We think there will be significant interest from the hospital community to participate in this program," Richards says. "You can select the episodes and the market you want to participate in, so you're not mandated to move forward but you're encouraged to be thoughtful and selective in how you move into value-based care. Hospitals are not being told they have to do this, but they're being given incentives because, ultimately, this is where everything is going, and hospitals need to start finding the best path to get them there."
Previous BPCI participants have proven that both large urban hospitals and smaller rural facilities can be successful with bundled payments as long as they are willing to make the right investments, Richards says.
"Our recipe has been a pretty deep investment in clinical analytics. You have to be able to digest a large amount of clinical and claims data to understand what the opportunity looks like, and you have to invest in the technology and analytics to be able to execute against the program," Richards says. "You also have to have an organizational commitment to some real clinical care redesign, especially for what happens when patients leave the hospital."
Richards notes that the eligibility for the MACRA Quality Payment Program will be beneficial to hospitals as they look for different ways to affiliate with physicians.
"Hospitals will choose to participate as a way to drive the patient experience and differentiate yourself in the market, because quality and the patient experience will improve in this program," he says. "The ability to qualify as an APM will let you build physician alignment models around the program, and now the biggest reason to participate is the financial opportunity it presents to the hospital. To be successful in this program you have to reduce variation and costs in the post-acute side, not so much in the acute setting where you may feel like you've maxed out your strategies, so hospitals can look for opportunities to save money outside the four walls of their hospital."
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Gregory A. Freeman is a contributing writer for HealthLeaders.