What the Future May Look Like for Reimbursement

What the Future May Look Like For Reimbursement: A New Bundled-payment Demonstration Model  “Bundled Payments for Care Improvement Advanced” (BPCI)
By Peggy Dotson

Over the last several years, you may have heard of, or participated in, various models for payment consolidation or episodic-payment approaches considered by the Centers for Medicare and Medicaid Services (CMS). One of the most important goals at the CMS is “fostering an affordable and accessible healthcare system that puts patients first.” 

The latest model demonstration by the CMS began October 1, 2018 with multiple entities signing agreements (1,299) with the CMS to participate in the new “Bundled Payments for Care Improvement Advanced” (BPCI) model. This new federal bundled-pay initiative aims to improve patient care in both hospitals and post-acute care while lowering overall costs. A bundled payment methodology involves combining the payments for physician, hospital, and other health care provider services into a single bundled payment amount.

The first cohort of Participants began on October 1, 2018 with a model period performance to run through to December 31, 2023. Participants include 832 acute care hospitals (including Trinity Health, Adventist Health System and Tenet) and 715 physician group practices. (See Attachment A for full list). The CMS will provide a second application opportunity in January 2020.

How the New Bundled Payment Will Work

The participating entities will receive bundled payments for certain episodes-of-care as an alternative to fee-for-service payments, which was authorized through Section 3021 of the Affordable Care Act.

BPCI Advanced aims to encourage clinicians to redesign care delivery by adopting best practices, reducing variation from standards of care, and providing a clinically appropriate level of services for patients throughout a Clinical Episode. This single payment amount is calculated based on the expected costs of all items and services furnished to a beneficiary during an episode of care. The intent of a single bundled payment to health care providers is to motivate health care providers to furnish services efficiently, to better coordinate care, and to improve the quality of care.

Healthcare providers receiving a bundled payment may either realize a gain or loss, depending on how successfully they manage resources and total costs throughout each episode-of-care. This concept is not too dissimilar to the current Home Health Prospective Payment for a 60-day episode-of-care.  

A bundled payment also creates an incentive for providers and suppliers to coordinate and deliver care more efficiently because a single bundled payment will often cover services furnished by various health care providers in multiple care delivery settings.

BPCI Advanced will operate under a total-cost-of-care concept, in which the total Medicare fee for services (FFS) spending on all items and services furnished to a BPCI Advanced Beneficiary during the Clinical Episode, including outlier payments, will be part of the Clinical Episode expenditures for purposes of the Target Price and reconciliation calculations, unless specifically excluded.

Under the new BPCI Advanced demonstration, the CMS will pay providers a known fixed amount for an episode-of-care.

  • The episode-of-care could start with an initial hospital admission or an outpatient procedure and includes all care during the next 90 days.
  • Providers will be paid a benchmark price and can keep savings minus 3%.
  • Savings payments will be adjusted based on performance on seven quality measures. The Quality Measures selected for the BPCI Advanced model include:
All-cause Hospital Readmission Measure (NQF #1789) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft Surgery (NQF #2558)
Advanced Care Plan (NQF #0326) Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (NQF #2881)
Perioperative Care: Selection of Prophylactic Antibiotic: First or Second Generation Cephalosporin (NQF #0268) AHRQ Patient Safety Indicators (PSI 90)
Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550)  

NOTE: The All-cause Hospital Readmission Measure and Advance Care Plan are required for all Clinical Episodes. The other five quality measures only apply to select Clinical Episodes.

  • If the participant exceeds the target amount, they would be penalized up to 20% of costs.

Hospitals and doctors can now receive bundled payment for up to 29 different clinical episodes. The 29 Inpatient Clinical Episodes includes:

Disorders of the liver excluding malignancy, cirrhosis, alcoholic hepatitis Gastrointestinal obstruction
Acute myocardial infarction Hip & femur procedures except major joint
Back & neck except spinal fusion Lower extremity/humerus procedure except hip, foot, femur
Cardiac arrhythmia Major bowel procedure
Cardiac defibrillator Major joint replacement of the lower extremity
Cardiac valve Major joint replacement of the upper extremity
Cellulitis Pacemaker
Cervical spinal fusion Percutaneous coronary intervention
COPD, bronchitis, asthma Renal failure
Combined anterior posterior spinal fusion Sepsis
Congestive heart failure Simple pneumonia and respiratory infections
Coronary artery bypass graft Spinal fusion (non-cervical)
Double joint replacement of the lower extremity Stroke
Fractures of the femur and hip or pelvis Urinary tract infection
Gastrointestinal hemorrhage  

 
The Three Outpatient Clinical Episodes includes:

  • Percutaneous Coronary Intervention (PCI)
  • Cardiac Defibrillator
  • Back & Neck except Spinal Fusion

Reconciliation will be a semi-annual process where CMS will compare the aggregate Medicare Fee For Service (FFS) expenditures for all items and services included in a Clinical Episode against the ‘target price’ for that Clinical Episode to determine whether the Participant is eligible to receive a payment from CMS, or is required to pay a Repayment Amount to CMS.

This demonstration, which runs through December 31, 2023 will be the basis for a Go or No-Go decision to expand the demonstration, or expand the clinical episodes as part of the demonstration (could include wound care related clinical issues) or, enacting regulations to change the way hospitals and doctors will be paid for select clinical episodes.  

Conclusion

All in all, the CMS is continually evaluating more efficient ways to pay providers (hospitals, physicians/ other qualified healthcare providers) and suppliers for the healthcare services of the Medicare and Medicaid population. It is likely that certain wound care clinical episodes, especially in the outpatient setting, could be selected by the CMS for evaluation as part of this demonstration in the future.  It may be wise for wound care specialists to begin to look at their population of patients and understand the common aspects and deliverables of the care they receive across a 90-day period, as a marker for a potential ‘episode-of-care’ model. Better to begin to think in this vain rather than be blindsided a few years down the road.

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