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. 

HHS Secretary Nominee Alex Azar Lauds Value-Based Care

Though the tide is still turning in the shift from fee-for-service to value-based care, there is no question that value is the way of the future for healthcare. Health and Human Services (HHS) Secretary nominee, Alex Azar reaffirmed in his confirmation hearing his support of this shift, signifying that the pace of healthcare and payment reform could quicken soon.

Azar expressed that he intends to focus on continuing to transition healthcare from volume to value—one of his top four priorities. Azar says that making the transition to value-based care will “serve as a catalyst for change throughout the healthcare system,” as the Centers for Medicare & Medicaid Services (CMS) sets the tone of payment structure in the industry.

Azar believes this shift will combat payment inefficiencies and allow for healthcare resources to better serve Medicare beneficiaries. If confirmed, Azar will likely continue CMS’s efforts of the past few years towards this approach.

Azar’s belief in value incentives are a reinforcement of the “new direction” that CMS Administrator Seema Verma announced for Center for Medicare & Medicaid Innovation (CMMI) back in September. Azar’s support of furthering the value-based movement is an opportunity to both strengthen the industry as a whole, while increasing operational efficiencies.

As we envision the future, Archway believes that bundled payment programs – one segment of value-based healthcare – will be a driving force in the industry. By rewarding clinicians for improved patient outcomes and lower operating costs, value-based payment structures allow providers to better control care management and patient readmissions.


CMS Poised to Launch New Voluntary Bundled Payment Program

On November 30, 2017, CMS Administrator Seema Verma announced that the new Medicare voluntary bundled payment initiative will be launched soon. Archway couldn’t be more excited.  

In our experience, voluntary, specialist-driven bundled payment models are the best way to improve healthcare for patients, increase autonomy for specialists, and reduce healthcare costs. Proactive specialists participating in these programs can drive real improvement in our healthcare system. With this new initiative around the corner, our goal is to help as many providers as we can to evaluate, enroll, and succeed.

We welcome the opportunity to partner with you to evaluate the program and determine the best path forward for your organization. Success in bundled payments requires a partner you trust. We’re proud of our approach and want to emphasize how our attributes make us the best partner to achieve long term success:

The Archway Team. We have assembled a veteran team of bundled payment experts, healthcare strategists, clinicians, data scientists, technologists and entrepreneurs. Our entire company is completely focused on bundled payments; it’s all we do.   

Transparency & Trust. Our company’s values are: integrity, accessibility, program intelligence and openness. We strive for long-term, trust-based relationships and take pride in achieving continuous improvement through shared learning.

Experience. Our team has been working in bundled payment for more than 10 years. We have been active in all of the Medicare programs since their inceptions and are armed with insights honed from eight reconciliation periods in BPCI.

Continued Success. We have a 100% success rate. Every one of our BPCI partners is improving care for their patients and earning savings in the program. Through transparency and best practice sharing, we continuously learn from and work with our partners to increase savings.  

Comprehensive Platform. We have developed a full-service, internally-built bundled payment platform that includes strategic guidance, web-based data analytics, patient tracking software, gainsharing contracts, risk financing and flexible pricing.

Pricing Flexibility. We can share risk, or we can work on a licensing fee basis. As a provider-centric partner, we are committed to developing the right financial model for your organization.

We are excited to share our plans to launch a complementary training series on the BPCI-Advanced program, engineered to prepare you for success. To participate in this series, please express your interest by contacting us.

CMS Testing Episode Cost Measures for Future Payment Program

As the healthcare industry continues to innovate, the Centers for Medicare & Medicaid Services (CMS) is charging forward to test and roll out new payment models. In October, CMS announced the field testing of eight, physician-driven bundles that could be used in the cost performance category under the Merit-based Incentive Payment System (MIPS) in the future. While MIPS may be on the chopping block, do we really think that’s likely to happen?   Previous CMS testing gives us reason to believe that CMS may incorporate its findings into future bundled payment programs.  

The eight episode cost measures include:

1.     Elective Outpatient Percutaneous Coronary Intervention (PCI)
2.     Knee Arthroplasty
3.     Revascularization for Lower Extremity Chronic Critical Limb Ischemia
4.     Routine Cataract Removal with Intraocular Lens (IOL) Implantation
5.     Screening/Surveillance Colonoscopy
6.     Intracranial Hemorrhage or Cerebral Infarction
7.     Simple Pneumonia with Hospitalization
8.     ST-Elevation Myocardial Infarction (STEMI) with (PCI)

CMS released specifications for the bundles including new trigger site criteria; some of these bundles also include pre-trigger periods ranging from 30 – 60 days.  

Before we expand further on this topic, let us pause to acknowledge that your experience is important, and CMS wants to hear from you. Share your feedback through an easy, online survey on these test measures by November 15, 2017.

Another Win For Physicians

In all of these episode-based cost measures, or bundles, the episode is attributed to a physician. This confirms and reinforces the priorities outlined in the RFI released in September concerning the Center Medicare and Medicaid Innovation (CMMI) “new direction.” The content of the RFI strongly suggested the prioritization of physician-driven models, and CMS continues to reaffirm its commitment with the field testing of these new physician-focused cost measures. Like CMS, we see value in this approach as evidenced by our experience. Bundled programs can be successfully utilized across the continuum of care, however, specialist providers are among the group to most consistently demonstrate value when owning the bundle.

Outpatient Bundles

For five of the eight bundles, the trigger event can take place in an ambulatory setting, indicating CMS is exploring the implementation of outpatient bundles. Ambulatory bundles have been an untapped source of savings for CMS. These bundles are more conducive to physician-driven, value-based care, and eliminate the reliance on MS-DRG assignment, which has been a challenge for Bundled Payments for Care Improvement (BPCI) participants. Adoption of the outpatient knee arthroplasty measure was contingent on CMS’ decision to pay for the procedure in the hospital outpatient department setting, which CMS confirmed it would on November 1, 2017.  Field testing of outpatient bundles also helps inform improvements in the physician attribution process, improvements which may be adopted in the next generation of BPCI.

New physician attribution

CMS is also exploring an alternative attribution methodology for the new inpatient-anchored bundles it is testing. In the current BPCI program, bundles are attributed to the attending or operating physician on the inpatient claim. CMS has intimated that hospitalists being assigned the bundle was an unintended consequence of the program’s design.  

For the new bundles triggered by an inpatient admission, the attributed clinician is the clinician who renders at least 30% of the evaluation and management services provided during a hospitalization. It is clear that hospitalists, who care for patients while in the hospital, are not the best-suited providers to care for a patient 30-60-90 days after discharge, and this new method may reveal opportunities for improvement in upcoming programs.  

How to Participate

Archway is glad to see CMS moving full speed ahead in developing physician-focused innovative payment models. Regardless of how the MIPS final rules work, we are pleased to see CMS learning from past programs to enhance future advancements in alternative payment models.

Share your feedback with CMS by November 15, 2017.

We also strongly urge physicians to access confidential feedback reports on these measures. For those participating in any of the eight bundles above, you may be able to view your Field Test Report on the CMS Enterprise Portal. There is further information on the MACRA site. If you need any help understanding your data and reports, please contact us at to arrange a one-on-one discussion.