Archway Health, an innovator with healthcare organizations and self-insured employers in risk-based payment programs, today announced the addition of three new members of the Archway team to help lead the organization as it broadens and deepens its services and support. Joining the organization are Chris Couch, Chief Operating Officer; Janna Lacatell, Vice President of Commercial Markets; and, Mark Pacala, Member of the Board of Directors.
On May 17, CMS hosted a webinar on the BPCI Advanced Pricing Methodology. During the webinar, CMS provided a detailed overview of the steps involved in setting BPCI Advanced Target Prices, and some new information on the pricing methodology including the use of a compound lognormal distribution to account for a provider’s patient case mix.
Archway is excited by the granularity CMS will use in setting prices in BPCI Advanced, as it aims to encourage both high- and low-cost providers to participate and incentivize the delivery of high-value care.
At the conclusion of the webinar, CMS announced they will soon be releasing Preview Target Price Summary Workbooks that contain a detailed breakdown of all relevant Target Price components. While these Preview Workbooks contain sample data only, the provision of these workbooks allows Archway to fully understand the program pricing methodology and data parameters in advance of receiving real data and target prices later this month. Components included in the workbooks include:
• Peer group characteristics and spending trends used to construct PAT factors
• Risk Adjustment parameter estimates from the baseline period
• Patient-level characteristics by bundle category and patient covariates at the Episode Initiator level
• Physician group practice (PGP) offset calculations for low- and high-cost PGPs
Archway is hosting a webinar next week on these topics and encourage you to join to learn more. Archway’s Chief Analytics Officer, Mah-J Soobader, Ph.D., MPH, will discuss the implications of the Workbook detail.
Register now for Archway’s next BPCI Advanced webinar on Thursday, 5/24, 1:30 – 2:30 pm EST.
BPCI Advanced has been a hit with providers, which has CMS expressing enthusiasm for the level of interest in the new program.
In a recent Archway Health webinar, we polled 80 providers to capture why they applied to BPCI Advanced and what they hope to gain from the program.
Opportunity for New Revenue
Not surprisingly, the primary reason many providers have applied to participate in BPCI Advanced is to seize the opportunity to generate more revenue for their organization. More than three-quarters of respondents, 77%, said they applied because of the “opportunity for new revenue.”
The new applicants have likely seen and heard about the revenue generated by their peers who participated in the original BPCI program. Archway’s partners in BPCI earned on average $3,000 per episode of care. And now with best practices and a second-generation of the program, providers in BPCI Advanced will be able to achieve even better results.
The opportunity for providers to generate revenue with BPCI Advanced is twofold. In addition to the rewards for efficient and effective care, BPCI Advanced participants that meet certain requirements will automatically qualify for a bonus that is awarded to those in the Advanced Alternative Payment Model (APM) track under MACRA. Nearly half of survey respondents, 45%, said they applied to BPCI Advanced “to qualify for the 5% APM bonus under MACRA.”
Stepping Stone to Commercial
More than half, 52%, of respondents said they applied to BPCI Advanced to prepare for commercial bundles. Commercial bundles are self-designed and self-guided programs, thus requiring a certain level of bundled payment expertise to achieve success.
At a recent conference, our chief analytics officer, Dr. Mah-J Soobader told audience members, “The pathway to commercial is experimenting in Medicare programs, and experimenting successfully.” Astute, future-minded providers who are planning to contract directly with commercial health insurance plans down the road are experimenting now with BPCI Advanced to gain the experience to manage their own bundle programs.
Vehicle for Change
Providers increasingly recognize the need to move from volume to value, but it is difficult to implement change without incentives, tools, data, or structure. BPCI Advanced presents a framework for providers to ease into value-based case by providing:
- Upside reward with downside risk protection
- The opportunity to start small with just one bundle
- Data to analyze in advance
- The opportunity to drop out of the program at certain stages
Just putting in an application can give providers insight into specific aspects of care and operations that have room for improvement and can spark a conversation between leaders about the best ways to go about it. 40% of respondents recognized this benefit of bundled payment programs and said they applied to the BPCI Advanced “to use the program as a vehicle for organizational change.”
New Features More Attractive
BPCI Advanced builds on the original BPCI program with new features informed by data and provider feedback. One of those new features is an updated pricing methodology that has been adjusted to be more equitable and attractive to both low- and high-cost providers.
In our survey, 30% of respondents answered: “the refined pricing model might offer more incentive to their organization than that of the original BPCI program.” As providers prepare to receive their data and target prices in the coming months, it is important to keep in mind that success will be driven not just by your initial pricing, but also by your opportunity to increase savings relative to your peers over time.
Additional survey results revealed:
- 67% of respondents that applied to BPCI Advanced had not participated in the original program
- 39% of respondents have experience in risk-based contracts
- When looking at a convener for partnership in BPCI Advanced, providers’ priority needs include analytics, bundled payment expertise, risk protection, and guidance in redesign among other things.
As Archway predicted when CMS first gave indication of BPCI Advanced, the program has attracted many providers new to bundled payments. We are excited by the response and committed to helping providers succeed.
For those who missed out this time, there will be another chance to apply in 2019.
Contact our team to learn more.
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.
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.
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.