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CMS Launches New Bundled Payment Initiative

Medicaid Payment PerspectivesCMS launches new bundled payment initiative

A new CMS payment model is on the way this year. Announced January 9, the Bundled Payments for Care Improvement Advanced (BPCI Advanced) model continues CMS’s push to lower healthcare costs and improve quality of care – value purchasing, in a nutshell.

BPCI Advanced is a Medicare fee-for-service (FFS) program that provides a single bundled payment for all physician, hospital and other provider services during a 90-day duration of Clinical Episodes. There are 32 Clinical Episodes (29 inpatient and three outpatient). Payment is retrospective and tied to performance on quality measures. This is a voluntary model and will begin Oct. 1, 2018.

A Clinical Episode begins at either the start of an inpatient admission or an outpatient procedure; this is determined by MS-DRGs for inpatient or HCPCS codes for outpatient. Episodes can include multiple clinically related admissions and/or procedures. The episode ends 90 days after the start of care.

BPCI Advanced, however, is not a substitute for Medicare FFS prospective payment. Those payments will continue unchanged. BPCI Advanced is another payment layer. Through a semi-annual reconciliation process, CMS will compare FFS payments for a Clinical Episode to a Target Price for that episode and make an additional payment to the provider or require a repayment amount from the provider. CMS will calculate a Benchmark Price for each Clinical Episode based on casemix-adjusted historical data and apply a 3 percent discount to determine Target Prices. Target Prices will be provided prior to the start of each Model Year.

BPCI Advanced payments or repayments will be further adjusted for quality care incentives. The program will use seven quality measures. Two measures, All-cause Hospital Readmissions and Advanced Care Plan, will be used for all Clinical Episodes. The other five apply to specific episodes.

  • All-cause Hospital Readmission Measure (NQF #1789)
  • Advanced Care Plan (NQF #0326)
  • Perioperative Care: Selection of Prophylactic Antibiotic: First or Second Generation Cephalosporin (NQF #0268)
  • Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550)
  • Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft Surgery (NQF #2558)
  • Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (NQF #2881)
  • AHRQ Patient Safety Indicators (PSI 90)

CMS will use a provider’s quality measures to calculate a Quality Composite Score that will be used to increase payment (or decrease negative reconciliation) to high-performing providers or decrease payment (or increase negative reconciliation) to low-performing providers, capped at 10 percent.

The goals of the model are to incentivize care coordination, quality improvements and cost reductions. This follows Medicare’s 30 years of success using diagnosis related groups to prospectively pay for inpatient care; DRGs, upon implementation, achieved those goals. In the case of BPCI Advanced, it also puts the financial risk on the provider and creates an incentive to redesign care delivery that reduces costs while maintaining or improving quality of said care.

Eligible providers include acute care hospitals, physician groups and other entities that initiate care, including those that are not Medicare-enrolled providers or suppliers. The application deadline for providers to participate was March 12, 2018. After that, providers will have to wait until 2020.

FAQ about BPCI Advanced is available on the CMS website.