Bundled Payments for Care Improvement (BPCI) was an initiative created by the Center for Medicare and Medicaid Innovation (CMMI) to test the efficacy of several different episode-based payment models in producing higher quality, more coordinated health care at a lower cost to Medicare. BPCI was launched in 2013 concluded in 2018. The BPCI Advanced Model is a new iteration of the program and a continuation of efforts to implement episode-based payment models, also referred to as bundled payments.
Bundled Payments and BPCI
In traditional fee-for-service (FFS) payment models, providers are paid for each individual service they furnish to patients for a single illness or course of treatment. Bundled payments provide a single, comprehensive payment that covers all services provided during a patient’s episode of care (services provided to a beneficiary with a medical condition within a specific time frame and across the continuum of care).
Medicare has been working towards reducing healthcare costs through episode-based payments for more than three decades, beginning with the introduction of the inpatient prospective payment system (IPPS) in 1983. BPCI was the most ambitious and wide-ranging bundled payment initiative CMS had ever attempted, and included hospitals, physician groups, post-acute facilities, and more. BPCI participants could choose from one of four models, and three of the four models gave participants the ability to further specify which of 48 different clinical episodes they would include.
Each of the four BPCI models had important differences in which portions of the continuum of care were included, as well as in how payments were made and discounts calculated. Specifically, each model varied in:
- Eligible participants
- Clinical conditions included
- Included services (various combinations of inpatient, post-acute, and readmissions)
- Expected discount
- The method for provider payments
- Quality measures used
Was the Initiative Effective?
The overarching goal of bundled payment models, including BPCI, is to reduce the cost of care while preserving or improving outcomes. There is clear evidence that BPCI participants that included surgical procedures in their bundle have achieved both cost and quality improvements, but more progress needs to be made in bundles focused on chronic conditions. Timing may be an issue, as hospitalizations correlate well as the beginning of a surgery-involved episode, but are unlikely to align with the onset of a chronic medical condition. In order to thrive under bundles for chronic conditions, hospitals will have to take a more proactive approach and tackle non-clinical issues that feed into chronic conditions, including social determinants, though most currently lack the mechanisms to do so.
BPCI Advanced
The Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model is the new iteration of BPCI. The new model aims to build on the successes of BPCI, while making modifications to correct deficiencies in the old program. Some key differences include:
- A wider view of the episode of care – the duration of all clinical episodes now includes the anchor stay + 90 days, while the original BPCI program allowed participants to choose from 30- 60- or 90-day bundles.
- There is a higher element of risk, with the following elements all playing a role:
- Fewer exclusions are allowed – all Part A services resulting from the Anchor Stay/Procedure are be included, as well as post-acute services, including home and hospice care. Participants must expand their cost and quality efforts to include services previously excluded from the bundle.
- Up to 10% of payments are at risk for quality performance – this differs from the original program, which had no quality component.
- Downside financial risk will take effect immediately – the phase-in period utilized in the original program is not part of BPCI Advanced.
- Outliers are more narrowly defined as the 1st and 99th percentile – the original program allowed three tracks (1st and 999th, 5th and 95th, or 5th and 75th) for determining which patients episodes would be capped before inclusion in cost calculations, based on their status as an outlier.
- Changes to align with other quality programs, prevent overlap, and incentivize physician group practices (PGPs):
- BPCI Advanced will qualify as an Advanced Alternative Payment Model (Advanced APM) through the Medicare Access and CHIP Reauthorization Act (MACRA) – this could incentivize physician group practices and hospital-employed physicians to participate in order to avoid payment adjustments under the Merit-based Incentive Payment System (MIPS).
- Next Generation or Track 3 MSSP ACOs are excluded – participants in these and other APMs will need to be aware of the rules regarding how and when various payment models may be implemented.
- Hospitals could lose episodes to PGPs – in the original BPCI program PGPs were in the minority, and were at a disadvantage if they joined in Phase II as opposed to Phase 1. Under BPCI Advanced, PGPs will always take precedence.
The opportunities presented by BPCI Advanced will allow participants to progress in terms of value-based care, but will also present increased risk and less flexibility than the original program. It remains to be seen whether the updates to the BPCI model will produce additional benefits, but it’s clear that CMS will continue to drive towards value-based care with episode-based reimbursement models.
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