BPCI Advanced Preliminary Target Prices and Participation Review

By Aditya Govil, as featured in Fierce Healthcare

The Centers for Medicare and Medicaid Services (CMS) went live with their latest voluntary bundled payments model – Bundled Payments for Care Improvement Advanced (“BPCI Advanced”) – in October 2018. Participation remains robust with approximately six out of the seven members of the inaugural cohort continuing in the program, despite having the option to unenroll by March 1, 2019 without penalty. For the fraction of participants who did unenroll, common reasons for departure included (1) target prices not covering patient expenses, (2) soft patient volumes, and (3) failing performance improvement efforts. In this post, I describe how prospective acute care hospital (ACH) participants should think about taking advantage of CMS’ BPCI Advanced program.

Reviewing qualified providers, target prices and market penetration

CMS issued hospital specific preliminary target prices for each bundle – 105 DRGs representing 29 inpatient bundles and 29 HCPCS representing three outpatient bundles – where ACHs met the historical minimum volume threshold, i.e., a minimum of 41 patients from January 2013 – December 2016. The lowest number of participants (163) qualified for the double joint replacement of the lower extremity bundle, while the greatest number of participants (3,025) qualified for the simple pneumonia and respiratory infections bundle (Exhibit 1).

Exhibit 1: BPCI Advanced Qualified Participants* Spread    *Participants exclude (1) prospective payment system-exempt cancer hospitals, (2) inpatient psychiatric facilities, (3) critical access hospitals, (4) hospitals in Maryland, (5) hospitals participating in rural community hospital demonstration, and (6) rural hospitals participating in Pennsylvania rural health model due to their unique payment methodologies, pursuant to the CMS program eligibility requirements.

Exhibit 1: BPCI Advanced Qualified Participants* Spread

*Participants exclude (1) prospective payment system-exempt cancer hospitals, (2) inpatient psychiatric facilities, (3) critical access hospitals, (4) hospitals in Maryland, (5) hospitals participating in rural community hospital demonstration, and (6) rural hospitals participating in Pennsylvania rural health model due to their unique payment methodologies, pursuant to the CMS program eligibility requirements.

Additionally, I estimated the annual population size to determine which bundles had the greatest potential for patient impact in terms of number of Medicare beneficiaries and total allowable Medicare spend for the given disease condition (Exhibit 2).

Exhibit 2: BPCI Advanced Annual Potential Patient Impact

Exhibit 2: BPCI Advanced Annual Potential Patient Impact

Therefore, while much has been said about CMS’ Comprehensive Care for Joint Replacement (CJR) model, a model whose participants are excluded from the Major joint replacement of the lower extremity bundle (DRGs 469 and 470) in BPCI Advanced, the real opportunity for providers to create value for their patients lies within treating Sepsis (DRGs 870, 871 and 872). Further, if the range of preliminary target prices is an indication of variability of patient care and associated clinical pathways, then Sepsis patients seen at 2,899 qualified providers across the nation have a maximum allowable CMS spend per patient that ranges from $15,065 to $108,404 (Exhibit 3). The Sepsis bundle is ranked third in terms of the range of preliminary target prices issued to providers, and has a median spend of $31,328 per Medicare beneficiary and mean spend of $34,035 per Medicare beneficiary.

Exhibit 3: Preliminary Target Prices and Ranges by Bundle

Exhibit 3: Preliminary Target Prices and Ranges by Bundle

As of March 15 2019, data from CMS indicates that 316 ACHs have continued participating in the Sepsis bundle representing 10.9% qualified provider bundle market penetration (Exhibit 4). Further, prior to the March deadline, which allowed providers to change the composition of their portfolio of bundles, 480 ACHs had signed up for the Sepsis bundle, which represented a 16.56% qualified provider bundle market penetration rate. Therefore, the real opportunity lies with the remaining 2,419 qualified providers to deliver better outcomes at a lower cost for their Septic patients.

Exhibit 4: Qualified Provider Bundle Market Penetration   (alphabetical order by bundle and setting)

Exhibit 4: Qualified Provider Bundle Market Penetration
(alphabetical order by bundle and setting)

Path forward

On April 24, 2019 CMS announced that non-binding applications for the second cohort of participants are due by June 24, 2019, and made no indication of any future cohorts. ACH executives unsure about including this program in their value-based care strategy should request their CMS data to inform their opportunity to participate in the program. Additionally, patient care givers and administrators can look beyond American shores for evidence on the efficacy of bundled payments for various disease conditions. As a starting point, ACHs should compare their average Medicare spend per beneficiary against CMS’ preliminary target price, which will help outline the financial cushion available to them to participate in this retrospective bundled payment program (anchor + 90-day post-acute).

CMS Office of the Actuary is projecting national health expenditures to grow at an average annual rate of 5.7% for 2018-27, with Medicare leading this growth at an average annual rate of 7.6% over 2020-27. While studying ACH performance (cost and quality) in BPCI Advanced will require more time, the October 2018 and March 2019 decisions by participants should help policymakers project where they are likely to see an impact, and where they should focus their efforts. The common underpinning for all health care stakeholders is the need to address Medicare insolvency.

Unsure about participating in BPCI Advanced?