After months of anticipation, the Centers for Medicare & Medicaid Services recently announced Bundled Payments for Care Improvement Advanced, the agency’s latest alternative payment model for Medicare. BPCI Advanced is a voluntary program, and as such satisfies the Trump administration’s desire to replace mandatory bundled payments with voluntary initiatives. In late November, the CMS cancelled two models, the Episode Payment Model and the Cardiac Rehabilitation Incentive Payment model, and modified the ongoing Comprehensive Care for Joint Replacement (CJR) model. This wave of activity will shape physician participation in bundles for years to come, and makes 2018 a pivot point for Medicare’s involvement with the model.

Hospitals in the CJR are the first to feel the impact of the recent changes. Throughout the month of January, hospitals in 33 of the program’s original 67 markets were allowed to permanently withdraw from the program. Low-volume and rural hospitals in the other 34 markets, in which participation remains mandatory, were also allowed to opt-out. The changes are likely a welcome development for affected hospitals. Since bundles pay hospitals a set amount per-episode, a high patient volume allows a hospital to spread the financial risk of treating expensive patients across a large population. Low-volume and rural hospitals likely face difficulties generating sufficient case volume in the CJR. Decisions by hospitals in the 33 voluntary markets should be mixed, and reflect specific market conditions and historical performance in the program. Hospitals remaining in the CJR will be locked-in until the program ends on Dec. 31, 2020.

Other providers are eagerly awaiting BPCI Advanced. Launching Oct. 1, 2018, BPCI Advanced will replace the ongoing Bundled Payments for Care Improvement initiative, a popular model with more than 1,000 participants. In addition to being voluntary, BPCI Advanced will resemble BPCI in several other ways. BPCI Advanced includes many of the same episodes featured in the original BPCI such as major joint replacements, COPD, heart attacks, and strokes. Also, the new program brings back Conveners, which group small providers together and offer a buffer against financial risk, and includes the 90-day episode duration familiar to BPCI participants.

Two major factors distinguish BPCI Advanced from its predecessor. First, BPCI Advanced allows episodes to start with an outpatient visit for three procedures, while BPCI focused entirely on inpatient visits. Second, BPCI Advanced qualifies as an Advanced Alternative Payment Model (AAPM) under MACRA. While including outpatient episodes could spur more physicians to participate, AAPM qualification should be BPCI Advanced’s most attractive quality, as participating in an AAPM allows physicians to earn a 5 percent bonus on their Medicare Part B payments. Few AAPMs are in operation today, and BPCI Advanced will help remedy that situation by offering a flexible program with a broad reach and enticing payment incentives. Expect to see more than 1,500 participants in BPCI Advanced by year’s end.

At that point, CMS will have in place a foundation for future voluntary bundled payment models. If participation in BPCI Advanced meets expectations, CMS could expand the number of episodes available to providers by launching entirely new models that target a single procedure or group of episodes. Also, models that only include outpatient providers may appear if results from BPCI Advanced’s outpatient episodes are favorable. Creation of such new models would be in line with expectations that the Trump administration will support payment reform, but with voluntary participation requirements designed to limit burdens on physician groups and hospitals.

Tyler Dinwiddie is a market analyst at DRG with expertise in bundled payments and consumer-driven health plans. Follow Tyler on twitter @TylerDinwiddDRG


CMS unveils new alternative payment models targeting rural health and therapy areas

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