5 Reasons to Participate in the CMS Bundled Payments for Care Improvement Initiative

In February, CMS announced an open period for additional organizations to apply for the agency's Bundled Payments for Care Improvement Initiative.

moneyInterested organizations have until April 18 to submit the required forms for consideration for Models 2, 3 and 4 of the BPCI initiative.

These  BCPI models differ depending on the type of healthcare providers involved,  the nature and time from for services included in the bundle and payment methodologies. Participants can select as many as 48 different clinically related condition episodes for each model.

In Model 2, the episode of care includes the inpatient stay in an acute-care hospital and all related services during the episode, which will be considered to end either a minimum of 30 and up to 90 days after discharge. Model 3 involves episodes of care that are triggered by an acute-care hospital stay but begin at the initiation of post-acute care services with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency.

By contrast, under Model 4, CMS will make a single, prospectively determined bundled payment to the participating hospital for all services administered during the inpatient stay. Related readmissions for 30 days after discharge are included in the bundled payment amount.

Bob Bauer, a senior vice president with the consulting company Navvis Healthways, says the initiative has the potential to both produce cost savings and widen providers' focus to encompass the whole continuum of care.

"Right now, in our fee-for-service world, everyone is just focused on what they do," he says. "We don’t routinely and naturally look at the total treatment to say this is the best course of treatment, the most efficient, the most cost-effective. With bundled payments…suddenly, whoever's leading the bundled payment initiative cares about what happens to the patient in all the various settings that they might go to and is really focused on that person's health and appropriate treatment throughout the course of care."

Mr. Bauer and Ernie Tsoules — also a senior vice president with Navvis — have identified the following five reasons why hospitals and health systems should consider applying for the BPCI initiative.

1. It presents an opportunity to create a focused effort to reduce costs and improve quality and patient experience for selected procedures. "Since you can choose which clinical areas you wish to participate with, the BPCI program allows you to target specific service lines for improvement," Mr. Bauer says.

2. It provides a platform for more meaningful physician engagement concerning care improvement initiatives. Mr. Tsoules says his company has observed many health systems will pay "lip service" to physicians when it comes to improvement efforts, and they will limit their involvement to clinical initiatives, not letting them have a hand in financial (such as payer contracting), operational or strategic matters. The BPCI initiative enables providers to more easily share the value created from bundled payments with participating physicians and opens a door for health systems to let physicians out of the "clinical box" in terms of their involvement in the program.

"We think highest-performing organizations will walk the walk with physician leadership," Mr. Tsoules says. He also emphasized the importance of a physician-led governance structure with respect to overseeing the organization's participation in bundled payment contracting programs, such as the BPCI.

Mr. Bauer agrees physician engagement is critical to success not just within the BPCI initiative, but also in all healthcare reform efforts. "Without really meaningfully engaging the physicians in those efforts, you're really going to fall short of what's possible," he says.

3. It can allow hospitals to gain a better understanding of the total cost of care per case. Increasingly, CMS and other payers will want hospitals to take responsibility for the total cost of care associated with a case, according to Mr. Bauer.

"The BPCI program enables hospitals to begin developing this perspective in a controlled manner with defined financial risk," he says.

4. The BPCI initiative can inform hospitals about post-acute provider use and results. In the same vein as knowing the total cost of care associated with a case, the program can help hospitals gain a deeper understanding of post-acute service utilization. "This can help identify variations in cost as well as results (e.g. readmissions) that may be impacting the health system," Mr. Bauer says.

It's particularly important for hospitals to gain this awareness, given that post-acute costs could directly affect hospital payments through CMS' Hospital Value-Based Purchasing program, which will include average Medicare spend per beneficiary as part of its formula.

"That spend is calculated by looking at the cost of care for three days prior to admission and up to 30 days post discharge," Mr. Bauer says. "It explicitly includes your costs of post-acute care. Hospitals need to be concerned about post-acute spending."

5. The initiative can help hospitals adapt to value-based payments. "Episode" pricing models offered by some large health systems have been proven attractive to major employers, Mr. Bauer says. Additionally, some commercial payers have instituted upper payment limits for certain procedures.

Both of those developments suggest providers will increasingly need the ability to provide all-inclusive "quotes" on the cost of care. "The BPCI program is an excellent organizational learning opportunity for this type of payment arrangement," Mr. Bauer says.

More Articles on Bundled Payments:
DataGen Signs Contracts to Provide Support for BPCI  
4 Stories on Bundled Payments  
CMS Opens Bundled Payment Initiative Enrollment 


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