Our Take on BPCI Advanced Target Pricing Methodology

Arguably, the most important aspect of a bundled payment program structure is how the bundle price is decided; prices should be fair to providers and cover all appropriate services for optimal patient care. With the release of BPCI Advanced in January, the Centers for Medicare & Medicaid Services (CMS) provided an updated pricing methodology that we believe drives improved patient care and benefits provider participation more than the original program.

Given the importance of target price to a provider’s success in bundled payments, we have provided our analysis of the new methodology below to help providers further evaluate BPCI Advanced before they finalize their participation decision in August.

Why Update Target Pricing?

In BPCI Advanced, CMS wanted to address many concerns heard from BPCI 1.0 participants who consulted with the agency in the development of the new program. With the new methodology, CMS stated that its goals are to:

  • Encourage both high-cost and low-cost providers to participate
  • Reward participants’ improvement over time
  • Adjust for patient case mix that is not under the provider’s control
  • Allow for regional trends and other relevant provider characteristics
  • Induce Medicare savings while maintaining high-quality care

Key Strengths of the Methodology:

  • Episode-Specific Adjustments will enable better prediction of episode spend.
  • Two-Stage Patient and Peer-Group Risk Adjustments will create fair comparisons between like patients and like providers, providing a higher target price to enable appropriate care to be provided for those serving more severe and vulnerable populations.
  • Use of standardized payments will remove differences in geography and payment policy, allowing for more accurate comparisons across providers.
  • Index Price Trending will remove variation caused by price changes across years, ensuring that factors outside of providers’ control do not impact their target price.  
  • Capping of high-cost episodes to reduce the impact of outlier spend on pricing will protect providers from loss due to catastrophic events.

Four Major Steps of the Methodology:

In determining a provider’s target price, the BPCI Advanced methodology will comprise the following steps in assessing provider data and performance during the 2013 to 2016 baseline period: 

  • Hospital Benchmark Price will be based on a hospital’s historical performance, levels of patient severity, and persistent differences in peer hospitals and trends to the model year. 
  • PGP Hospital-specific Benchmark Price will build upon the Hospital Benchmark Price with adjustments for a PGP’s historical efficiency and case mix relative to the hospital during the baseline period.
  • The Preliminary target price will then incorporate the automatic 3% program discount and convert the standardized dollars from the analysis to real dollars. 
  • The final target price will then adjust for the actual patient case mix for the performance period and convert again to real dollars at reconciliation.

Additional Qualifiers and Timeline:

Below are other key aspects of the pricing methodology and timeline for potential participants to keep in mind:

  • Participants will only receive their Preliminary Target Price during the application process (May 2018). The Final Target Price will only be determined after the performance period is complete to account for case mix changes during implementation.
  • PGPs will receive a separate benchmark price for each hospital that initiates an episode.
  • Acute care hospitals with 40 or fewer episodes during the baseline period (2013-2016) are not eligible to participate in model year 1 and 2.
  • PGPs will not receive preliminary target price for episodes initiated in acute care hospitals with less than 40 episodes in the baseline period.

What We Are Still Waiting on from CMS

To fully evaluate the program, we will continue to look for:

  • Final prediction models and pricing methods. CMS has said that these are still in development.
  • Specific analysis data files. Archway has recommended to CMS that they provide detailed model parameters and standardized payment data files to participants with their raw data for organizations to replicate the pricing and accurately determine their opportunity and areas to improve care.
  • Clarity on incentivizing efficient providers. Archway has asked CMS to provide clarity on how low-cost, high-performing providers will be encouraged to join the program.

Keys to Success

  • Providers need to understand their historical performance, what impacted their price, and the major cost drivers of price relative to their peers to fully evaluate their opportunity in the program.
  • Implementation strategies will need to be provider specific. High-cost providers will benefit from reducing costs through improving quality and care efficiency, while low-cost providers will need to evaluate their pricing advantage, as well as their ability to further improve against feasible benchmarks.
  • Providers will need to initially and continuously evaluate their opportunity during the 5-year performance period (2018-2023), as it will be driven not just by their initial pricing, but also pricing changes over the course of the program and their opportunity to increase savings relative to their peers.
  • With hospital-specific prices for PGPs, new alignments will be forged between PGPs and hospitals, and partnering with the right providers will be critical as it will not be obvious whether historically low- or high-cost hospitals will be better partners until pricing is finalized and providers can fully evaluate.

High-performing, low-cost providers need to quickly decide if they have a pricing advantage due to their high performance as this could create immediate financial opportunity.  Archway is the only organization that has benchmarked performance for all 32 episodes nationwide for physicians, physician groups and hospitals.

As you’ve likely noted, pricing methodology is complex and organizations are going to need a partner with expertise to fully evaluate the impact and opportunity. If you have any questions about these pricing topics or how we can help you evaluate your decision, contact us.

BPCI Advanced Open Window Reflections: What We Know and What We’re Still Waiting For

At the beginning of 2018, The Centers for Medicare & Medicaid Services (CMS) announced its most innovative bundled payment program yet, BPCI Advanced, officially kicking off a busy and exciting two-month window for providers to apply to the program. 

Tremendous Interest
During the application process, Archway was proud to apply with many practices and providers. Since March 12, the application deadline, our team has been notified by CMS that the agency is working through the program’s “high volume of inquiries” and are “excited about the enthusiastic response” to BPCI Advanced. We are too. It is encouraging to see the momentum building in the shift to value-based care. 

CMS has driven strong uptake in value-based care models, as evidenced by the interplay of other models with BPCI Advanced. In the application period, many providers had to consider the hierarchy of Accountable Care Organizations (ACOs), the mandatory Comprehensive Care for Joint Replacement Model (CJR), and BPCI Advanced, reflecting the prevalence of these new alternative payment models. Attribution ‘trumping’ was not an issue with BPCI 1.0 just a few short years ago.

New Features, New Crowd
As promised, CMS made significant changes to the BPCI Advanced program from its original predecessor. We believe the amount of interest can be largely attributed to the program improvements outlined below. New entrants to the market were drawn by:

  • New outpatient bundles – CMS tested episode cost measures in November 2017, hinting at potential outpatient bundle features in new programs. BPCI Advanced includes three outpatient bundles: Cardiac Defibrillator; Back & Neck, except Spinal Fusion; and Percutaneous Coronary Intervention (PCI).
  • More fair pricing methodology – CMS refined its target pricing methodology, determining how providers earn shared savings. With the incorporation of regional pricing adjustments, peer group factors, patient-level risk factors, and a regression model, we believe the new methodology incentivizes provider participation more than the original program. 
  • New Advanced APM Qualification – BPCI Advanced qualifies as an Advanced Alternative Payment Model (Advanced APM) under the MACRA Quality Payment Program, giving many specialists the first chance to receive the 5% bonus under MACRA’s A-APMs track. 

Having been involved in BPCI 1.0 and advocated for providers in development of the new program, we predicted these and other new features of BPCI Advanced. The continued and increased interest in bundled payments is evidence that the changes are appealing to many. 

More to Learn
Prior to August 1, when providers have to make their final participation decision, there are still more details to come from CMS. Providers will be receiving data and target prices for their bundles. 

What we’re still waiting for: 

  • Pricing methodology details – Remaining elements include final prediction models and clarity on incentives for low-cost, high-performing providers
  • Fraud and Abuse waivers – Requested by CMS to allow BPCI Advanced participants to engage in NPRA Sharing   
  • Quality scoring methodology – Details forthcoming on how CMS will calculate providers’ individual Composite Quality Score   
  • Participation Agreement – These will outline the criteria for permissible Financial Arrangements among NPRA Sharing Partners 

Though we are waiting for these items, we encourage providers to get started on identifying their opportunities and designing and building a program. Don’t wait to set yourself up for success in BPCI Advanced. 
 

Reflecting on ACCC: Commercial Bundle Contracting for Cancer Care

Archway’s chief analytics officer, Mah-J Soobader, PhD,  recently presented at the Association of Community Cancer Centers (ACCC) 44th Annual Meeting and Cancer Center Business Summit in Washington D.C. Each year, the event brings together hundreds of cancer care professionals and thought leaders to explore innovative approaches for navigating the biggest challenges and opportunities in oncology.

As rising healthcare costs have caused industry-wide concern, an opportunity that has been brought to the forefront is developing better ways to pay for cancer care. Dr. Soobader spoke on a policy panel at ACCC, “Preparing for Commercial Bundles in Oncology.” The panel offered insights on successful strategies to simultaneously reduce the cost and improve the quality of cancer care.

Dr. Soobader provided a window into Archway’s process in collaborating with organizations to build successful commercial bundled payment programs. The major takeaway from Dr. Soobader’s presentation is that a clinically-informed, data-driven episode is the key to building an accurate, fair and profitable bundled payment program. Archway helps healthcare organizations gather their performance data and data of peers to determine where the opportunities lie for more efficient care. In finding and testing areas for improvement, providers are then able to negotiate their prices with payors. 

For providers interested in building commercial bundle programs, Dr. Soobader advised, “The pathway to commercial is experimenting in Medicare programs, and experimenting successfully.” In other words, Archway recommends providers participate in either the Oncology Care Model (OCM) or Bundled Payments for Care Improvement (BPCI) Advanced Initiative to determine what works with some guidance from CMS before striking out on their own. Based on experience, Dr. Soobader recommends this approach as a way for organizations to identify key strategies required to be successful in bundled payment programs.

Whether you start with Medicare bundles or are developing your own commercial programs, data-driven insights will be the key to healthcare improvement and financial success in bundled payments. Talk to us about receiving and analyzing your own data to analyze your opportunity in bundles.

Q&A with CEO of Archway Health, Dave Terry

We sat down with our CEO and Co-Founder, Dave Terry, to pick his brain about bundled payments and why he got into this line of work. 

Let's start with the industry. What role do you see bundled payments playing in the future of healthcare?

Bundled payments are a key part of the movement toward value-based healthcare. If you think about ACOs, they are really focused on helping primary care physicians take control over the patient process and manage the health of the population they care for. But, bundled payments are focused on specialists. That's creating opportunity and accountability for specialists to improve the process, improve outcomes and reduce costs for their patient population. 

We like to think of it this way: population health is about meeting the basic needs of a broad population, and bundled payments are about what happens when the patient gets sick and needs more specialty care. Bundled payments help us to proactively manage that process and episode for a patient that has a specific condition, put the appropriate specialist in charge of that process, and help that patient get better and get back home as quickly and safely as possible. It also helps them work with the best providers along the care continuum, improve outcomes and reduce costs. 

Why do bundled payments work? Is it truly a win for all involved parties?

We do think bundled payments can create a win-win for all parties involved. From a patient perspective, it's certainly a win. When a patient has a specialty need, whether it's a hip replacement, spine surgery, or even a medical condition, it's best for a specialist who knows the most about that procedure being responsible for the patient's care. In a bundle, it creates new incentives and opportunities for the specialist to engage with that patient over the full course of the treatment, not just while they are doing the procedure or when the patient is in the office. We've seen better outcomes when the specialists are fully engaged throughout the full treatment period - patients get home faster, they ambulate faster, and they have a better experience. 

We think this approach is also better for the specialist for a couple of reasons. There's increased satisfaction and autonomy over the process - not just performing the procedure but helping to see patients get better and staying with them through that process. You're understanding what's going on in the rehab setting, understanding what's really needed for the patient, and interacting with those patients. So, that autonomy and satisfaction increase among the specialists who participate in these programs. There's also financial reward for the specialists. When specialists do well in these programs, they can earn more revenue. So, yes, there's more engagement with the patients, and the revenue goes up as well. 

From the payor's perspective, this greater engagement and greater interaction between the specialist and the patient translates into decreased overall costs. The patient gets home faster. They utilize less nursing home services. Physical therapy is more efficient. They ambulate faster. They get better faster. And, readmissions go down. So, we've seen dramatic decreases in costs from the payor's perspective. 

Bundled payments are truly a win for all parties - patients, providers, and payors.

What advice would you share with practices on the fence about BPCI Advanced?

The first and most important piece of advice is to make sure you get on an application for the BPCI Advanced program by March 12. It's a non-binding application process from CMS. There's no commitment yet, but it gives you a lot of value. 

First, it gives you the option to participate in the program when the model goes live October 1. And, second, maybe more importantly, it gives you access to your data. You'll get pricing information and four years of historical claims data. And, you'll get to do an informed assessment of what the program looks like for you and what the opportunities for improvement are to earn savings. Then, in the summer, you can decide if you want to participate or not. But, if you don't get on that application by March 12, you won't be able to get that information, and you won't be able to make an informed decision. Providers ask us if it's too late to begin the application, even now. From our perspective, it's not too late, and providers shouldn't hesitate to get started.

What drew you into healthcare as a profession?

I got into healthcare right out of college in the early '90s. I was interested in public policy and politics. But, healthcare has always been interesting to explore, particularly how we pay for healthcare and how we organize the system. It's always been a fascinating issue for me. Fortunately, I've been able to spend most of my career working on different reimbursement models and care and risk management programs like ACOs, capitation, pay-for-performance, and now bundled payments. 

It just seems like there is so much opportunity for improvement, and it's a very important issue. And, I've always found it an exciting space to work in. My goal is to help find ways to make some improvements. We think bundled payments are an innovation in the payment world that makes a big impact on those improvements. It improves care. It improves the process both for the patients and the physicians. 

Review of CMS' Open Door Forum

Sign up for our webinar today at 2 pm EST to learn more

Yesterday, CMS held its first Open Door Forum about the recently announced new voluntary program, BPCI Advanced. We joined the Forum and are sharing our five key takeaways from the event with you. Archway will be providing additional detail during our upcoming webinar on Wednesday, Jan. 31 at 2 pm EST.

1. Public interest is very strong.
CMS received more than 600 questions about BPCI Advanced leading up to the Open Door Forum.

2. In the next few weeks, CMS will release details on the following program components:   
Target Pricing: During the Open Door Forum, CMS outlined the intricacies of the updated target pricing methodology, which will no longer be based solely on a provider’s historical costs. New adjustments will incorporate:

  • Patient comorbidities through the use of HCC risk factors
  • Peer group characteristics based on the 9 US Census Regions
  • Peer Adjusted Trend (PAT) Factor to replace the BPCI Trend Factor
  • Regression model for added risk adjustments

CMS’s incorporation of HCC risk factors and regression modeling resonates with the pricing methodology for CMS’ cancer bundle program, the Oncology Care Model, in which Archway has deep experience.

CMS also announced it will adjust Major Joint Replacement of the Lower Extremity (MJRLE) target prices for fracture status, and will soon release more detail on how Total Knee Arthroplasty in the hospital outpatient setting will impact target prices for the inpatient MJRLE bundle. Archway was excited to learn that CMS will release detailed specifications about the new target pricing methodology in the next few weeks; we will provide our insights on the new methodology shortly after its release. 

Composite Quality Score (CQS): CMS announced its plan to provide more detail on how the CQS will be calculated for program participants in the next few weeks.

3. The most common questions CMS received were related to CJR program hierarchy.
CMS reiterated that CJR takes precedence over BPCI Advanced for the assignment of MJRLE bundles.

4. Outpatient bundle anchor setting.
CMS confirmed that OP bundles can only be triggered in the hospital outpatient department setting.

5. Baseline period.
CMS announced that the baseline period used to calculate benchmark costs will be a four-year period from January 1, 2013 to December 31, 2016. Applicants who request data through the application process will receive three years of data, January 1, 2014 to December 31, 2016. In preparation of this program, Archway has purchased more than five years of Medicare claims data, including 2013, and can help providers understand their performance during the full, four-year baseline period.

Lastly, CMS has scheduled a second Open Door Forum, to be held on Thursday, Feb. 15 from 12 pm to 1 pm EST. Registration is now open.

To learn more about BPCI Advanced and evaluate your opportunity in the program, please contact Archway today.