(Updated at 5 p.m. ET)
Trinity Health, Adventist Health System and Tenet hospitals are among those opting into a new federal bundled-pay initiative that aims to improve patient care in both hospitals and post-acute care while lowering overall costs.
In all, 1,299 entities have signed agreements with the CMS to participate in the Bundled Payments for Care Improvement Advanced model. The participating entities will receive bundled payments for certain episodes of care as an alternative to fee-for-service payments that reward only the volume of care delivered.
The model participants include 832 acute care hospitals and 715 physician group practices.
Under the new BPCI Advanced demonstration, the CMS will pay providers a fixed amount for an episode of care. Those episodes could start with an initial hospital admission or outpatient procedure and include all care during the next 90 days.
Providers will be paid a benchmark price minus 3%. If they exceed the target price, they would be penalized up to 20% of costs. Savings payments will be adjusted based on performance on seven quality measures.
This model qualifies as an advanced alternative payment model and will be eligible for bonuses under MACRA.
Hospitals and doctors can now received bundled payment for up to 29 different clinical episodes. That's down from 48 possible episodes in the original model.
The performance period for the first cohort of providers runs through Dec. 31, 2023.
Participants have already raised concerns that the target prices are too low and could cause some hospitals to exit the demonstration next spring.
Christina Smith Ritter, CMS' director of the patient care models group, insists that the payment methodology was an improvement over the original BPCI model, which based targets on an individual provider's historical spending data. However, that formula wasn't sustainable as eventually providers would improve their performance so much that they wouldn't be able to beat their historical spending trends.
"There is no way folks could continue to achieve significant savings off historical targets time and time and time again," Ritter said at an event Tuesday in Washington.
The original model gave some providers initial goals but changed them later. Now, providers will receive upfront goals, Ritter said. She acknowledged that the new formula may not be perfect and that she hopes industry will continue to give the agency feedback.
The CMS hopes to address issues with BPCI Advanced anti-kickback waivers in the future. The agency already has heard that the current waivers may not offer enough protection.
"There are nuanced issues about how the waivers were put together and how they may not fit with how [providers] put their [bundle] structures together."
It's too late to change waivers for the first year of the model, but the agency may revisit the issue in the future as they get additional feedback, Ritter said.
BPCI Advanced builds off the original bundled payment model that launched in 2013. That model has failed to produce any savings, and increased Medicare spending, according to a new report on the fifth year of the original BPCI model that was released Tuesday.
The model's turnover was high, considering the demonstration was voluntary. The CMS decided to eliminate downside risks that it originally planned to impose.
The agency ultimately lost $285 million under the original BPCI model after it paid out incentive payments. If downside risk had not been eliminated, it could have resulted in $144.3 million savings to the Medicare program.
The CMS removed downside risk to draw providers to the model and to get them used to bundled pay models, Ritter said.
"We like to call it the most expensive experiment ever undertaken under the Medicare program," Ritter said referring to the original BPCI model.
