The Centers for Medicare and Medicaid (CMS) released in October the third annual Bundled Payments for Care Improvement (BPCI) evaluation report, produced by healthcare consulting firm The Lewin Group. Skeptics of this particular CMS Advanced Alternative Payment Model (APM) say it is difficult to confirm whether or not the payment model is beneficial. However, we were encouraged by the report, as it demonstrates where BPCI bundled payments have been successful, and addresses program design deficiencies that CMS has begun correcting in newer programs.
With regards to quality, the 2017 BPCI report did not show significant improvement among the program’s participating providers. While CMS does track quality performance in BPCI, provider payments are not adjusted by quality scores, signaling a lack of concrete incentive for providers.
CMS began to address this shortcoming in more recent bundled payment programs, including Comprehensive Care for Joint Replacement (CJR), Oncology Care Models (OCM) and the recently canceled Episode Payment Models (EPM) by adopting quality scoring methodologies that impact provider reimbursement. And, in the forthcoming next generation of BPCI, CMS will close the loop by requiring that provider payment be adjusted by quality performance so that providers qualify for the Advanced APM track under Medicare Access and CHIP Reauthorization Act (MACRA).
Target Pricing Methodology
The BPCI report also statistically confirmed previous concerns voiced by providers about the program’s pricing methodology. The current BPCI methodology is based on provider-specific historical data; participants are rewarded for improving efficiencies in relation to their historical spend. As a result, many providers who had already made efforts in care redesign before the start of BPCI opted not to participate in the program, as they’d be disadvantaged under the target pricing methodology.
In the subsequent CJR and EPMs programs, CMS incorporated regional spend into target prices to incentivize high-performing providers to continue to engage in care improvement efforts. For OCM, CMS adopted national pricing factors to establish more equitable target pricing among participants. Additionally, CMS has indicated that the next version of BPCI will strive to bring both highly efficient and less efficient providers into the fold.
Reliance on Medicare-Severity Diagnosis Related Group (MS-DRG) Assignment
The 2017 BPCI report also revealed challenges in determining the appropriate bundle for patients with comorbid conditions. Currently, episodes in the BPCI program are triggered by an inpatient admission, and the corresponding MS-DRG assignment dictates the target price. For patients with multiple diagnoses, it can be difficult to know which bundle the patient will be assigned to.
CMS recently announced it is field-testing new ambulatory bundles for physicians under the Merit-based Incentive Payment System (MIPS). These bundles demonstrate CMS is looking to identify ways to define bundles that are not reliant on MS-DRG assignment. And, in finding more effective ways to assign bundles to the most appropriate physician, instead of defaulting to the attending or operating physician at the time of admission, CMS will have better insight to create a more adaptable assignment system for future bundled payment programs.
Turning Hindsight into Foresight
Archway was also encouraged by the physician-focused language in last month’s RFI concerning CMMI’s “new direction” as we believe this is a peek into the future of value-based payment models. Based on the language and priorities outlined in the RFI, Archway predicts that forthcoming payment models, including BPCI Advanced, will be more inclusive of specialty and independent physician practices.
So, despite limited data and some program design flaws, the third annual BPCI evaluation report reinforces that this innovative program is driving change in the healthcare market. BPCI participants consider bundled payments as “the future of payment reform” as they continue to be a championed tool of value-based care for Medicare, commercial payers, and employers.
Learn how Archway can be an ideal partner for your organization to participate in future bundled payments.