Those of us who follow the progression of the value based payment programs that are driving health care reform are eagerly awaiting the announcement by the Centers for Medicare and Medicaid Services (“CMS”) of a new voluntary bundled payment program expected to be called BPCI-Advanced.
CMS officials have said the program will be announced sometime this summer and will be the latest in a series of bundled payment programs launched by CMS.
The first CMS bundled payment program, the Acute Care Episode (ACE) program, was launched in 2009 under the George W. Bush administration and was a very limited pilot. The ACE program was followed by the Bundled Payment for Care Improvement (BPCI) Program in 2013, which allowed participants to choose from 48 episodes of care under four different models that provided a mix of episode structures (inpatient only, inpatient plus post-acute care, post-acute care only, etc.). BPCI also provided a mix of payment models in that it had both prospective payments (where the party taking the risk is paid by CMS in advance and must manage the payments to the other providers) or retrospective reconciliation (all providers bill CMS as usual under the fee-for-service system and at the end of the year the claims actually paid are compared to a Target Price to calculate episode savings or losses). Hospitals, physician groups and non-provider third parties were permitted to take the financial episode risk by entering into contracts with CMS and a waiver was issued providing more comfort and flexibility in gainsharing with providers. The BPCI program, is a five year program that terminates in 2018. It is purely voluntary and thousands of hospitals, physician groups and third parties (including Stryker’s Performance Solutions) became Awardees and took the financial episode risk by entering into risk contracts with CMS or participated as episode initiators.
The next bundled payment program launched by CMS was the Comprehensive Care for Joint Replacement (CJR) Program, which began in April, 2016, and covers the total joint replacement episode of care (DRG’s 469 and 470). CJR is based on, and very similar to, BPCI model 2 with retrospective reconciliation and episodes that cover the inpatient admission and post-acute care and readmissions up to 90 days after discharge. CJR, however, is a mandatory program that requires the hospital to take the financial episode risk. It applies to approximately 800 hospitals in the 67 Metropolitan Statistical Areas (MSAs) it covers and, with certain limitations, allows the hospital to share its upside and downside financial episode risk with providers.
The most recent bundled payment program to be formally announced by CMS is the Episode Payment Model (EPM) Rule. The EPM program creates three new mandatory bundled payment episodes: Acute Myocardial Infarction (AMI), Coronary Artery Bypass Graft (CABG), and Surgical Hip/Femur Fracture Treatment (SHFFT). The SHFFT episodes apply to the same 67 MSAs as CJR but the AMI and CABG episodes apply to 98 MSAs. In addition, EPM creates new cardiac rehabilitation incentive payment. The effective date of the EPM Rule has been delayed twice by CMS and is currently January 1, 2018. It is possible that it will be further delayed. In addition, Dr. Tom Price, Secretary of the department of Health and Human Services, was a vocal opponent of mandatory CMS bundled payment programs when he was a member of the House of Representatives and there has been a lot of speculation, fueled by hints from CMS officials, that CJR and EPM will be converted to voluntary programs soon.
What do we know?
Amid all this uncertainty, what do we know and what don’t we know about BPCI-Advanced? While we don’t know many of the details about the BPCI-Advanced Program, we do know some things based on recent statements by current and former CMS officials that I and other Performance Solutions team members have spoken to. BPCI has been a successful CMS program and, since it expires next year, CMS wants to see it continue through BPCI-Advanced. BPCI-Advanced will be a voluntary program, so it does not face opposition as mandatory programs like CJR and EPM do. In fact, many expect that there will be great interest in BPCI-Advanced, especially from physician groups, for two reasons. The first is that BPCI-Advanced will qualify as an Advanced Alternate Payment Model (APM) which exempts participating physicians from potential payment reductions they could face under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The second is that many physician groups participated in BPCI and generated substantial savings, especially in the total joint replacement episode of care. Physician groups are not allowed to take the financial episode risk under CJR and EPM, limiting their financial opportunity to capped gainsharing payments from the hospital. If a physician group takes the risk, it does not have to gainshare with the hospital (and many groups do not) and there is no cap since it is a risk transaction rather than a gainsharing payment. Many physician groups that missed the last opportunity to take the risk under BPCI are eager to do so under BPCI-Advanced.
We also know that BPCI-Advanced will have far fewer episodes of care to choose from than the 48 episodes in the current BPCI program. CMS has realized that there is insufficient volume to successfully manage many episodes of care and that surgical episodes of care are easier to manage than medical episodes of care. Total Joint Replacement (the highest volume and most successful episode of care in BPCI) will be one of the episodes of care in BPCI-Advanced and we are guessing that there will be other Orthopedic and Cardiac episodes. We have also heard that the same parties will be allowed to take the financial episode risk as under the current BPCI program, allowing physician groups and third-party non-providers to do so.
What don’t we know?
The most important thing we don’t know is how the Target Price is calculated. Under the current BPCI program, the Target Price is based on the historical claims cost of the hospital or physician initiating the episode, which had the unintended effect of burdening historically efficient providers with low Target Prices and rewarding historically inefficient providers with high Target Prices. Under CJR and EPM, CMS attempted to correct this by calculating the Target Price at first mostly on historical claims costs of the hospital or physician, with regional claims costs blended in. This shifts over time until the Target Price is set exclusively on regional claims costs. We don’t know if CMS will use the current method under BPCI, the current method under CJR or (and this is my best guess) something different. Until we know how the Target Prices are calculated, we will not know what opportunities exist under this new program.
What should you do now?
Although we don’t know the details of the new BPCI-Advanced Program yet, we have learned the key elements for success in CMS bundled payment programs from our experience in the BPCI and CJR programs. It is important to understand the opportunity to the extent possible, to communicate the opportunity to other team members, and to prepare for the release of the program, as there will likely only be a short time available to evaluate the claims data that CMS provides, understand the workings of the program, and make a decision to participate. It may be helpful to describe how Stryker’s Performance Solutions assists its current and potential clients to prepare for this opportunity. Performance Solutions has compiled a list of the episodes of care most likely to be included in BPCI-Advanced. Performance Solutions provides, at no cost, a BPCI-Advanced Opportunity Analysis that analyzes the historical CMS claims data on these episodes from your hospital or physicians group to determine which episodes present the best opportunity for your group or hospital.
While a final decision should await the release by CMS of the details of the program and an analysis of the actual claims data made available by CMS (more recent than the data currently available), our BPCI-Advanced Opportunity Analysis provides directionally correct indications of which episodes of care present the best opportunity. This analysis can be used to educate fellow team members about the BPCI-Advanced opportunity so plans can be made to evaluate the data and make a decision on whether to participate in the short time available. In addition, with a good idea of the episodes that will be pursued, your team can begin to plan for the data analytic, care redesign, physician alignment and patient engagement efforts that are critical for success under all bundled payment programs. Performance Solutions can assist in all of these efforts and help ensure your success in BPCI-Advanced or any other bundled payment program.
If you are interested in learning more, please visit our website at www.strykerperformancesolutions.com and sign up to attend our complimentary webinars focusing on BPCI-Advanced.
Paul Jawin, JD, Vice President, Alignment, Stryker Performance Solutions
Paul.Jawin@stryker.com
Paul brings more than 35 years of legal, business, financial and capital markets experience to his role in developing physician alignment and payment reform programs. A co-founder of Comprehensive Care Solutions—acquired by Stryker in 2012—he has helped physician organizations and health systems align and turn reform into opportunity by utilizing new payment and delivery structures, including Accountable Care Organizations (ACO) and bundled payments.
Paul is a regular speaker at industry conferences and events, including the American Academy of Orthopaedic Surgeons Hospital-Physician Alignment Symposium. He co-founded and served as Senior Vice President and General Counsel of Secured Independence, Inc., and has held senior executive positions with public and private companies involved in real estate and senior housing. Paul has a Bachelor of Arts degree in History from Ithaca College, and practiced corporate, securities and real estate law in New York City for more than 10 years after graduating from Syracuse University School of Law with a Juris Doctor degree.
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