Joint replacement bundled payments losing their appeal in BPCI Advanced

Analyses of CMS data on Medicare's largest bundled-payment demonstration suggest providers may have reached the limit of their ability to streamline joint replacement procedures.

While the joint replacement bundle for hips and knees has been one of the most popular of Medicare's Bundled Payment for Care Improvement Advanced program, providers are shifting to bundles for medical and chronic conditions like sepsis and chronic obstructive pulmonary disease.

On total joints, participants already may have done all they could to make care more cost-effective by reducing use of post-acute skilled nursing care, said Dr. Amol Navathe, assistant professor of health policy at University of Pennsylvania who studies bundled payment models.

For physician groups, the bundle for back and neck except spinal fusion replaced total joint replacement of the hip and knee as the mostly commonly selected episode—with 34% choosing back and neck, while selection of the joint replacement bundle plunged to 22% from 77%.

The target pricing on the joint replacement bundle often is moving lower, making it harder for providers to be financially successful with it, said Keely Macmillan, senior vice president of policy for Archway Health.

In addition, the CMS has changed the rules to allow traditional Medicare to pay for hip and knee replacements in outpatient settings, which may reduce the volume and increase the risk profile for patients in the BPCI Advanced program.

Outpatient hip surgeries are not eligible for BPCI Advanced.

Demonstration participation has strengthened even though its most popular bundles don't have the same allure. For the third model year of the BPCI Advanced program, 2,039 hospitals and physician groups signed up by Dec. 1, 2019. The number of participating hospitals grew by 41%, to 1,010, while the number of physician groups rose by 77%, to 1,029, according to Archway Health.

Nearly 80% of providers who joined the program in the first two years decided to stick it out for the third year.

The total number of clinical episodes selected by all participants increased 65%, to 12,719, though the average number of episodes selected per provided remained relatively flat at 6.5, according to Archway. Providers could choose from 33 inpatient and four outpatient conditions.

That's good news for the federal government's most ambitious bundled-payment experiment, a five-year demonstration that ends in 2023. The program, started in October 2018, is widely seen as one of the most promising approaches to accelerating the nation's transition to value-based payment.

Expensive medical and chronic conditions still show the promise of savings in the third year of the program. Back and neck, sepsis and percutaneous coronary intervention episodes of care saw the largest increases in participation, according to Archway.

The CMS increased the target price for the sepsis bundle in many parts of the country, Macmillan said.

Sepsis surpassed congestive heart failure as the bundled episode of care most frequently selected by hospitals—with 75% choosing sepsis, while selection of heart failure plummeted to 31% from 61%, according to an analysis by Singletrack Analytics.

Participating academic medical centers see opportunities to improve care and achieve savings with sepsis patients through earlier identification of their condition, said Dr. Keith Horvath, senior director of clinical transformation for the Association of American Medical Colleges.

Experts had hoped BPCI Advanced would encourage more provider groups to take on bundles for complex medical conditions like congestive heart failure, COPD, and sepsis, for which multiple hospitalizations and emergency department visits are common.

Under BPCI Advanced, the CMS pays a fixed price for each episode, which starts with an initial hospital admission or outpatient procedure and includes almost all services during the next 90 days. Providers make money if they keep total costs below the target price, which the CMS has discounted by 3%. They're at risk for up to 20% of costs that exceed the target price. Savings payments are adjusted based on performance on seven quality measures.

Physician groups' participation qualifies as an advanced alternative payment model under Medicare's Quality Payment Program, making doctors eligible for performance-based 5% bonuses. It also qualifies providers for safe harbors from fraud and abuse laws.

The CMS has said providers can no longer enter or exit BPCI Advanced, or select or drop episodes of care. Although some providers say they have pushed the agency to change that policy, a CMS spokesman said Thursday that the agency does not plan to have any additional application periods for model years 4 and 5.

The 57 academic medical centers participating at BPCI Advanced decided to continue participating at about the same level as in the first two years, Horvath said. Based on preliminary data, they expect to receive shared-savings bonuses from Medicare, he added.

AAMC member hospitals have some continuing concerns about the program, Horvath said. They particularly hope the CMS will adopt better quality measures to determine whether BPCI Advanced participants meet quality targets, for instance incorporating data from national registries of patient outcomes established by physician specialty groups.

Despite the increased participation in BPCI Advanced, studies have raised questions about whether it and other federal bundled payment demonstrations are achieving savings or improving quality of care.

Navathe and his colleagues recently reported in Health Affairs that BPCI Advanced reduced spending by just 1.6% from 2013 to 2016, with no overall change in quality.

Another recent Health Affairs study reported that lower extremity joint replacement is the only type of clinical episode in Medicare bundled-payment programs that has produced savings so far. The meta-analysis found no evidence of reduced spending or quality improvement for other clinical episodes.

Clarification: This story has been updated to clarify what is covered by traditional Medicare rather than BPCI Advanced.