On January 9, 2018, the Center for Medicare and Medicaid Innovation (CMMI) announced a new voluntary episodic payment model, Bundled Payment for Care Improvement Advanced (BPCI-A).  In addition to new revenue, BPCI-A offers providers the opportunity to gain experience with, and develop necessary infrastructure for, value-based payments.

Like other episodic payment models, BPCI-A participants will assume the risk for the total cost of care for a 90-day episode of care anchored by an inpatient admission or outpatient procedure.  If the actual cost is less than a pre-determined target price, CMMI will pay the difference to the participant.  If the actual cost is higher, however, the participant must pay the difference to CMMI.  The amount of both payments – from CMMI and to CMMI – is subject to an upper limit.

A BPCI-A participant may select from 29 inpatient and 3 outpatient clinical episodes.  These 32 episodes fall into 6 categories:  cardiology; gastrointestinal; pulmonary and infectious disease; kidney; spine, bone, and joint; and neurology.

An acute care hospital or physician practice group may participate as a non-convener or a convener.   As a non-convener, a hospital or group is responsible only for the episodes it initiates.  For a hospital, this would include its inpatient admissions; for a group, this would include inpatient admissions or outpatient procedures for which a physician in the group is the attending or operating physician.

As a convener, a hospital or practice also is responsible for those episodes attributed to those hospitals or practices with which the convener has entered into formal arrangements.  Other types of entities – such as a management company or a post-acute care provider – also can participate as conveners.

Although CMMI will contract only with a participant – either as a convener or a non-convener – participants may enter into arrangements with other providers to share the risks and rewards, subject to specific requirements.  These arrangements are intended to incentivize providers to participate in one or more of the pathways to success identified by CMMI:  patient education, data and dashboards, care navigation, multidisciplinary steering committees, standardized care protocols, and post-acute care preferred provider networks.

Applications for BPCI-A are due March 12, 2018.  Unlike its predecessors, BPCI-A does not require an applicant to identify specific episodes and propose target prices based on historical experience.  Instead, the applicant must detail its experience with, and commitment to, value-based care, including practitioner engagement, care re-design, quality assurance and improvement, and organizational capacity and readiness.  The applicant also must provide information regarding proposed financial arrangements with other providers.

Following receipt of applications, CMMI will calculate and distribute in May, to each qualifying applicant, its target prices for relevant episodes.  Target prices will be based on the applicant’s specific benchmark, less a 3% discount.  CMMI has not made available the specific formula for calculating benchmarks, but instead has provided broad parameters.

A hospital’s benchmarks will be based on (1) patient case mix, (2) patterns of spending relevant to the hospital’s peer group (e.g., an academic medical center will be compared to other AMCs), and (3) the hospital’s historic Medicare fee-for-service expenditures and resource use.

A physician practice group’s benchmarks will be anchored on the hospital at which episodes occur, but adjusted for the group’s historical experience.  This adjustment is intended to account for differences in groups’ practice patterns, thus encouraging greater physician participation.

In June, CMS will offer participant agreements to qualifying applicants.  An applicant will have until August to return the signed agreement with its selected episodes.  The applicant is under no obligation unless, and until, it signs this formal agreement with CMMI.

The initial performance period will start October 1, 2018.  Participants will not be allowed to leave the program prior to the end of 2019, meaning an applicant must be prepared to accept risk for a minimum of 15 months.  BPCI-A will continue through the end of 2023.  Providers that do not join the program this year will have at least one more opportunity to do so in 2020.

PYA’s experienced consultants can assist your organization in analyzing the BPCI-A opportunity, exploring financial arrangements with other providers, completing the formal application, and analyzing benchmarks to identify the episodes with the greatest likelihood for success.

Even if your organization is not wholly committed to participation, the opportunity to receive and review data relating to benchmark pricing for key episodes of care makes the application process worthwhile.  To discuss your BPCI-Advanced opportunity, please contact David McMillan (dmcmillan@pyapc.com) or Martie Ross (mross@pyapc.com).