The BPCI Advanced: The Next Generation of Bundled Payments from CMS

The United States Centers for Medicare & Medicaid Services (CMS) has introduced a new voluntary bundled payment model initiative known as the Bundled Payments for Care Improvement Advanced (BPCI Advanced).

Announced at the beginning of 2018, the BPCI Advanced has come in within just months after several mandatory bundled payment programs were canceled. During their initial phases, bundled payment initiatives had exhibited great promise. But later on, many challenges, ranging from identifying patients, understanding provider claim inputs and defining effective strategies, cropped up. The design of the new BPCI program has renewed the interest in episodic cost management as it counteracts the risks and complex implications connected to the former Medicare program MACRA.

Understanding Bundled Payments

Building up a high quality, but affordable and accessible healthcare system that puts patients first is the foremost goal at CMS. Previously, Medicare used to make separate payments to healthcare providers such as hospitals, post-acute care providers, physicians, etc. for each and every service performed for their patients irrespective of whether it was a single and short illness or a prolonged course of treatment. But they discovered that this payment model resulted in fragmented care, a lack of patient engagement and coordination between providers and healthcare settings. Care providers were being rewarded for the number of services offered rather than the quality of their care.

Bundled payments for care improvement which align incentives for providers were more effective and efficient as it encourages them to work closely together across all settings and specialties. All the payments of multiple services that beneficiaries receive during an episode of care are linked together. Healthcare providers involved in this payment arrangement are held accountable both performance-wise and financially for episodes of care. This leads to better patient engagement, coordination and more value-based care at a lower cost to Medicare. Those receiving the bundled payments may either end up with gains or losses depending on how successfully they handled their resources and costs during each episode of care.

Medicare promoted BPCI bundled payment programs as they have proven to decrease the providers' total expense on 90-day episodes. This BPCI Medicare payment model provides a lump sum bonus if aggregate fee-for-service (FFS) costs are less than an episodic benchmark. There are also penalties if the FFS costs are higher than the benchmark. This design of the BPCI program is aimed to motivate providers in decreasing their total episodic expenditures. This also includes the addition of internal costs of items such as implants.

Under the retrospective approach adopted by the BPCI Advanced, the total FFS payment for a Clinical Episode is retrospectively reconciled against a preset target price. The Benchmark Price is set by taking into consideration the historical Medicare FFS spending, the Episode Initiator's efficiency relative to its peers over time and the adjustments for patient characteristics and regional spending trends. A discount, known as the CMS Discount, is applied to the Benchmark Price to calculate the Target Price. Some of the major advantages of BPCI Advanced over the former BPCI program are the introduction of prospective pricing and the risk adjustment at both the provider and beneficiary level. The annual re-basing of Target Prices are also expected to generate more accurate pricing.

CMS Announcements on BPCI Advanced

The BPCI Advanced is classified as an Advanced Alternative Payment Model (APM) under the Quality Payment Program. The first group of participants is set to be active from October 1, 2018, and the model period performance will be for three months, until December 31, 2023.

All applications were processed via the BPCI Advanced Application Portal. Applications submitted outside of the Application Portal were not be accepted. Incomplete applications were also rejected. As per the plan, Target Prices are to be calculated and distributed to the applicants before the first performance period of each year. The target prices for this year are expected to be distributed in May 2018 and the applicants have time up to August 2018 to sign their participation agreements.

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Before signing the BPCI Advanced Agreement, participants have the option to review a summary of beneficiary claims data and line-level beneficiary claims. This is expected to be distributed by the end of May 2018. Participants who wish to view this information have to fill a Data Request and Attestation (DRA) form during their application process. They have to provide the time period for the requested data and also the legal basis for disclosure under the Health Insurance Portability and Accountability Act (HIPAA). This helps to get a valuable insight into a provider's care delivery processes and costs. If any applicant feels the current BPCI Medicare program is not a good fit for them, then a written request can be given to withdraw the application. For those who are unable to apply this time. a second application opportunity is expected from CMS in January 2020.

Clinical Episodes in BPCI Advanced Model

CMS has announced that the Bundled Payments for Care Improvement Advanced model will test a new iteration of bundled payments for 32 Clinical Episode which includes 29 inpatient Clinical Episodes and 3 outpatient Clinical Episodes. Participants of the BPCI Advanced will be held accountable for one or more Clinical Episodes from the launch of the program in October 2018 and are not allowed to add or drop such Clinical Episodes until January 1, 2020.


Inpatient Clinical Episodes

  1. Disorders of the liver excluding malignancy, cirrhosis, alcoholic hepatitis

  2. Acute myocardial infarction

  3. Back & neck except spinal fusion

  4. Cardiac arrhythmia

  5. Cardiac defibrillator

  6. Cardiac valve

  7. Cellulitis

  8. Cervical spinal fusion

  9. COPD, bronchitis, asthma

  10. Combined anterior-posterior spinal fusion

  11. Congestive heart failure

  12. Coronary artery bypass graft

  13. Double joint replacement of the lower extremity

  14. Fractures of the femur and hip or pelvis

  15. Gastrointestinal obstruction

  16. Hip & femur procedures except major joint

  17. Lower extremity/humerus procedure except hip, foot, femur

  18. Major bowel procedure

  19. Major joint replacement of the lower extremity

  20. Major joint replacement of the upper extremity

  21. Pacemaker

  22. Percutaneous coronary intervention

  23. Renal failure

  24. Sepsis

  25. Simple pneumonia and respiratory infections

  26. Spinal fusion (non-cervical)

  27. Stroke

  28. Urinary tract infection


Outpatient Clinical Episodes

  1. Percutaneous Coronary Intervention (PCI)

  2. Cardiac Defibrillator

  3. Back & Neck except Spinal Fusion

The Conveners for BPCI Advanced program

From hospitals and physicians to post-acute providers, multiple independent parties are engaged in delivering patient care across an episode. An organization that brings together these various care-providing parties is called a convener. The convener distributes the above-mentioned bonus or pays the penalty incurred with higher than benchmark FFS costs. The BPCI Advanced program applications were due on March 12. Starting on Oct. 1, 2018, the participants are subject to immediate downside risk.

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Any organization can play the role of convener, but they must have an adequate administrative capacity, the financial capacity to take on the risks and the ability to gain the trust of the various bundle participants. Hospitals, large physician groups, third-party consultancies, or specialty associations like the Academy of Academic Medical Colleges can serve conveners who rally local providers into agreements.

Since there is significant financial risk associated with the BPCI Advanced model, several conveners of the former BPCI dropped out when downside risk was phased in. But the organizations that had started to manage the previous bundled payment models successfully, are likely to succeed under downside risk as they will be more prepared for it. Organizations like consulting groups and product suppliers who do not have the ability to directly initiate episodic spending may find the risk levels in the BPCI Advanced program too high for them. Since post-acute facilities are also unable to initiate episodes under the new BPCI Advanced model, they may not be interested in serving as conveners either.

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Lifecycle Health has designed a healthcare care coordination and patient management software platform where all individuals involved in patient’s episode of care, including the patient and all the care providers, are able to coordinate and collaborate throughout the treatment episode. Though it may seem like Greek to most, our team of experts at Lifecycle Health understand what CMS is looking for. The Lifecycle Health cloud platform organizes multi-provider care teams around patient episodes, and manages patients along the care continuum that save providers time and costs. From the quality of care to costs and patient satisfaction, the Lifecycle Health platform allows its members to get real-time visibility into a patient’s episode of the various providers involved. Allow us to guide your organization to efficiently master the all-new bundled payment program, the BPCI Advanced.

If a convener, physician group, ACO, or hospital wants to become effective at managing risks for episodes for bundled payments or BPCI Advanced, -- they should look at utilizing the Lifecycle Health platform.  Lifecycle Health can provide them the platform to improve their internal care coordination, or they can also partner and utilize the Lifecycle Care Coordination service that is a turn-key solution utilizing the platform and plugs right into existing processes for patient care except the Lifecycle Health Patient Navigation and Coordination service to follow patients post-acute.