You all know my position on bundled payments – bullish. The most recent controversy has been about voluntary programs vs. mandatory programs. There are good arguments favoring mandatory bundles, but that’s not what I am going to talk about. The CMS has created a new voluntary bundled payment model: Bundled Payments for Care Improvement Advanced (BPCI Advanced). It starts in October and I thought you should be aware of it. Basically, this is a single retrospective payment for a clinical episode in an inpatient or outpatient setting, for a specified MS-DRG or HCPCS code. So, this is an Advanced APM (think MACRA).
Participants will receive payments from Medicare if total spending for a Clinical Episode is below a Target Price. Participants may receive adjustments to their payments under the model based on quality performance. There are 29 inpatient Clinical Episodes (MS-DRGs) and 3 outpatient Clinical Episodes (HCPCS codes) to choose from. The Episode is the admission + 90 days for inpatient, and procedure + 90 days for outpatient. The single payment will include all inpatient hospital and physician services, all ambulatory physician services, post-acute care services, and hospice care – basically all Medicare Part A & B services. Readmissions are fair in that they are paid separately if the event is for an excluded MS-DRG.
Payment is by retrospective reconciliation. That means CMS pays submitted claims first, like usual, then calculates providers’ total Medicare spending on the full Clinical Episode. If spending was below target price, CMS pays you up to target price; if spending was above, you owe CMS back. However, there is a stop/loss or gain limit, capped at +/- 20% of final Target Prices. So your upside and downside risk is limited. A couple more enhancements: coverage is allowed for SNF care (even if < 3-day hospital stay), and telehealth coverage is expanded to the home.
If a practice meets the other criteria for Advanced APM, this could qualify for the 5% incentive payment on top, making the downside risk even smaller. There is a variety of medical diagnoses as well as surgical procedures to pick from. You may recall that I believe episodic payment models will be easier to operationalize in Montana, where ACO models with lower attributed beneficiaries may struggle to avoid inadequate margins and downside risk that is eventually coming. For those of you who did apply, I would love to hear from you as we may be able to help. The program begins in October, and for most of us, we will watch the outcome with the first cohort, with a second opportunity to participate coming in January, 2020.
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