Voluntary Alternative Payment Models: The Risk of Sitting Out and Falling Behind

In a recent webinar with Becker’s Hospital Review, our General Manager of BPCI Advanced, Keely Macmillan, discussed why providers can’t afford to ignore the opportunity to consider joining the second cohort of participants in the Centers for Medicare and Medicaid Services’ Bundled Payments for Care Improvement (BPCI) Advanced program.

Momentum toward a future dominated by value-based payment programs continues with CMS regularly launching new alternative payment models, with a greater emphasis on two-sided risk. Given that value-based payment methodology often includes peer comparisons, those who wait to be dragged along will find themselves at a disadvantage when the voluntary option is replaced by mandatory participation.

Proof is in the pudding

CMS is rapidly moving providers toward two-sided risk arrangements. In recent months, CMS finalized the overhaul of the Medicare Shared Savings Program (referred to as Pathways to Success), announced the Emergency Triage Treat & Transport (ET3) model, expanded the Primary Care Transformation initiative to include five new options including the Direct Contracting model, and re-opened the window for the BPCI Advanced program. There are even more value-based care programs in the pipeline, including a new radiation oncology model expected to be announced this summer.

CMS is not just introducing these models as an experiment or exercise; they work. The rising participation in two-sided risk models is expected to further drive down spending over time, and early research shows promising results. For example, research published in JAMA found that episodic spending for major joint replacement of the lower extremity (MJRLE) decreased in hospitals participating in BPCI Classic when compared with non-participants. Participation in Comprehensive Care for Joint Replacement (CJR) and accountable care organization (ACO) models has also contributed to lower spending for MJRLE episodes across the country.

The impact of peer comparisons

The decline in spending for MJRLE bundles corresponds with a notable downward trend in BPCI Advanced MJRLE Peer-Adjusted Trend (PAT) factors, a component that adjusts target prices for differences in spending among hospital peer groups determined by regional location, size, and other characteristics. Peer group spending is trending downward in other episodes of care as well, including hip and femur procedures, congestive heart failure (CHF), and chronic obstructive pulmonary disease (COPD).

Similar to the region-based PAT factors in BPCI Advanced, CMS is increasingly using regional spending trends to set prices in downside risk arrangements. Other examples include the Comprehensive Care for Joint Replacement (CJR) program, cardiac episode payment models (EPMs), the Oncology Care Model (OCM), and the new geographical Direct Contracting model.

As a result, there is significant risk for those who choose to sit on the sidelines as value-based care initiatives evolve. Providers who opt out will fall further and further behind the curve, and will be at a disadvantage when two-sided risk models are mandated and pricing is determined by the more efficient peers in their region.

Essentially, the success that providers’ peers have in risk models today will dictate pricing in mandatory programs tomorrow.  

Outrunning the bear

Don’t let your peers rob you of a favorable target price. While we view APMs as a positive, for some providers it can be ominous. It is analogous to being chased by a bear. You don’t have to outrun the bear you just have to outrun everyone around you. The providers who have chosen to go forward in voluntary risk arrangements today are better positioned for the future. Those who have been resistant to the change are only falling farther behind and jeopardizing their own future chance of success, which will be based on their peers’ efficiency.

CMS has expressed that it wants all providers to bear risk by 2025, and that will come through the implementation of mandatory risk-based programs. We say: don’t wait. The voluntary programs of today provide the perfect opportunity to prepare for the day when mandatory participation is the law of the land.  

Start with BPCI Advanced. The window to submit a non-binding, risk-free application closes June 24, and it represents a great opportunity for providers to take control of their own future.

To get help submitting your non-binding application, risk-free application to BPCI Advanced, contact our value-based care team or call us 888-416-7775.