CMS' latest bundled-pay model attracts lots of interest, but key details missing

As they scramble to decide whether to apply for Medicare's new bundled-payment program by March 12, hospital and physician group leaders are leery about facing greater financial risk than in the current program. They also worry about key payment details that haven't been spelled out yet, consultants say.

Under the new Bundled Payment for Care Improvement Advanced demonstration program, which starts in October and runs through 2023, the CMS will pay providers a fixed price for an episode of care, with that price announced in advance. The episode starts with an initial hospital admission or outpatient procedure and includes all care during the next 90 days.

Providers will make money if they keep total costs below a benchmark price, discounted by 3%. That's a lower target price than in the current BPCI program, which includes just a 2% discount. They will be at risk for up to 20% of costs that exceed the target price. Savings payments will be adjusted based on performance on seven quality measures.

"That 3% could scare some people away," said Chris Garcia, CEO of Remedy Partners, a convener organization working with about 700 providers in the current BPCI program.

There will also be a new risk-adjustment formula for payments, designed to discourage providers from cherrypicking healthier patients. The CMS hasn't announced how that will work.

The new program has the potential to pull a far larger group of hospitals and physician groups into bundled payment than the 1,000 or so providers currently participating in BPCI. That could significantly accelerate the nation's transition from fee-for-service to value-based payment models, and help improve quality and coordination of care and reduce costs.

"There's a groundswell of interest because folks have seen bundles be successful in the market," Garcia said.

They are particularly attracted by the fact that participation by physician groups in the new demonstration qualifies as an advanced alternative payment model under Medicare's Quality Payment Program, making doctors eligible for performance-based 5% bonuses.

The CMS was smart in tying participation in the new bundled-payment program to the new Medicare physician bonus system, said Dr. Amol Navathe, an assistant professor of health policy and medicine at the University of Pennsylvania who studies bundled-payment programs.

"With more risk in Advanced, providers will be less attracted because there's more downside risk," he said. "But because of the new physician payment system, providers may be more likely to choose it."

In addition, the announcement of BPCI Advanced sends a strong signal to providers—after months of uncertainty whether the Trump administration would embrace value-based payment models—that they'll have to learn to succeed with these models. "That may convince providers to join the Advanced program," Navathe added.

Consultants working with providers on bundled-payment programs say that since the CMS' Jan. 9 announcement of the Advanced program, they've been inundated with questions from hospitals and physician groups, who must decide quickly whether to complete the demanding application process by the March 12 deadline. There will be another application opportunity in 2020.

"It's been a crazy few days," said Mark Hiller, vice president of bundled-payment services at Premier, which works with about 200 hospitals on the BPCI program.

The application will be especially challenging for providers who are new to bundled payments and who will have to describe how they will re-engineer their care processes to improve quality and reduce costs. BPCI Advanced allows providers to choose from a total of 32 bundled-payment clinical episodes, 29 of which start with an inpatient admission and three that start with an outpatient encounter.

Some consultants are advising providers to apply even if they are unsure whether they want to participate, because it's the only way to obtain from the CMS patient-identifiable claims data that can help them study their costs and care processes.

Many providers won't select the bundles they want to participate in until they see that data, which will enable them to determine which bundled-payment episodes contain cost-saving opportunities such as excessively high rates of hospital readmission or skilled-nursing facility use. Already-efficient providers may find the program less financially attractive than those that still have plenty of room to squeeze out wasteful care.

"We're telling people to request data on all 32 clinical episodes and then decide whether to apply," said Jonathan Pearce, a principal at Singletrack Analytics who helps providers with data analytics for bundled-payment programs. "You want to know what happened to those patients even if you don't want to do that bundle. You won't get this data otherwise."

The two-hospital St. Joseph Health System in South Bend, Ind., which currently participates in some BPCI bundles, is strongly considering continuing in the Advanced program, said Dr. Stephen Anderson, the chief medical officer.

One drawback, however, is that St. Joseph is also participating in the Medicare Shared Savings Program, an accountable care organization initiative. Clinical episodes for Medicare patients in the Track 3 Medicare Shared Savings Program ACOs can't be included in the new bundled-payment program. The same exclusion holds for episodes covered by Next Generation ACOs.

"A good percentage of our patients are in the ACO and aren't eligible for the bundled program," Anderson said. "That will weigh on our decision for bundles with relatively low volumes."

Another question mark for providers in BPCI Advanced is the so-called precedence provision. If both a physician group and a hospital are participating in a particular bundle, the physician group will be financially responsible for a patient treated by both entities. Consultants were disappointed by that provision, saying it will foster contention rather than collaboration.

Garcia said that while interest in the new program among his clients is high, the devil is in the details. "There are a lot of facts and details that aren't yet known," he cautioned. "We will have to take a hard look to see if it is viable."