Cracking the Code


Bundled-payment programs are alive and well. The proof is a brand new program – Bundled Payments for Care Improvement Advanced – which was introduced in January by the Centers for Medicare & Medicaid Services.

JHC readers may recall that neither former HHS Secretary Tom Price or Centers for Medicare & Medicaid Services Administrator Seema Verma were fans of mandatory bundled programs. In fact, they cancelled one program for cardiac care and scaled back another for orthopaedic joint replacement. But they didn’t count out voluntary programs. Neither has Price’s successor, Alex Azar.

In bundled payment programs, a group of acute- and non-acute providers agree to share the financial rewards of providing cost-effective, high-quality care to patients across a 90-day period (called a “Clinical Episode”), or bear the penalty for providing care that is too costly or of poor quality. Each provider continues to receive its fee-for-service reimbursement from Medicare. But if, collectively, they care for a patient across an entire Clinical Episode for less than the Medicare “target” cost (while maintaining certain quality standards), they share the savings.

The whole point is this: Providers across the care continuum are encouraged to work together to reduce the cost and improve the quality of a patient’s care.

Re-engineer care along the continuum
Some of the fine print in BPCI Advanced differs from that in the original BPCI program, which was launched in 2013. But its intent is the same:

  • Support providers who are interested in continuously re-engineering care.
  • Eliminate unnecessary or low-value care, increase care coordination and foster quality improvement.
  • Test a payment model that creates extended financial accountability for improved patient outcomes and reduced spending.
  • Stimulate rapid development among providers of new, evidence-based knowledge, that is, the Learning System.
  • Increase the likelihood of better health at lower cost through patient education and ongoing communication throughout the clinical episode.

“This effectively is a stake in the ground for the continued growth of value-based programs that reduce costs and deliver better care,” says Clay Richards, CEO and president, naviHealth, a Cardinal Health company that focuses on care transitions. “The administration has always supported voluntary models where providers can opt in, embrace a more flexible model structure, and qualify for greater incentives. The industry has been hungry for more programs like BPCI, and we believe BPCI Advanced signifies the future of value-based care.”

Says Mark Hiller, vice president of bundled payment services at Premier, BPCI Advanced “most definitely indicates a strong movement toward value-based payment, with bundles being one of the most impactful models amongst several others that are now qualified for Advanced Alternative Payment models under MACRA.

“Bundled payments are a tried and true mechanism that promotes integrated processes, operational efficiencies, physician engagement/alignment, and cross-continuum relationships for both patients and healthcare organizations.”

Post-acute providers will be pivotal in bundled payment programs, says Hiller, pointing out that skilled nursing facilities made up almost half of the BPCI participants.

BPCI Advanced will launch on October 1, 2018, and the Model Period Performance will run through December 31, 2023. CMS said it would provide a second application opportunity in January 2020.

Redesign care delivery
A BPCI Advanced “Clinical Episode” begins either at the start of an inpatient admission to an acute-care hospital (a so-called Anchor Stay) or at the start of an outpatient procedure (an Anchor Procedure). Inpatient admissions that qualify as an Anchor Stay will be identified by MS-DRGs, while outpatient procedures that qualify as an Anchor Procedure will be identified by HCPCS codes. The Clinical Episode will end 90 days after the end of the Anchor Stay or the Anchor Procedure.

BPCI Advanced will initially include 29 inpatient and three outpatient “Clinical Episodes.” Participants selected to participate in the program will be held accountable for one or more Clinical Episodes, and may not add or drop such Clinical Episodes until Jan. 1, 2020.

Types of services included in a Clinical Episode are:

  • Physicians’ services
  • Inpatient or outpatient hospital services that comprise the Anchor Stay or Anchor Procedure
  • Other hospital outpatient services
  • Inpatient hospital readmission services
  • Long-term-care-hospital (LTCH) services
  • Inpatient rehabilitation facility services
  • Skilled nursing facility (SNF) services
  • Home health agency services
  • Clinical laboratory services
  • Durable medical equipment (DME)
  • Part B drugs
  • Hospice services

CMS has selected seven quality measures for the BPCI Advanced Model. Two of them – “All-cause hospital readmission” and “Advance care plan” – will be required for all Clinical Episodes. The following five measures will only apply to select Clinical Episodes:

  • Perioperative care: Selection of prophylactic antibiotic.
  • Hospital-level, risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty.
  • Hospital 30-day, all-cause, risk-standardized mortality rate following coronary artery bypass graft surgery.
  • Excess days in acute care after hospitalization for acute myocardial infarction.
  • AHRQ patient safety indicators, including pressure ulcer rate, in-hospital fall with hip fracture, iatrogenic pneumothorax rate, perioperative hemorrhage or hematoma rate, postoperative acute kidney injury, postoperative respiratory failure, perioperative pulmonary embolism or deep vein thrombosis, postoperative sepsis, postoperative wound dehiscence and unrecognized abdominopelvic accidental puncture/laceration.

Cracking the code
“While we’re not surprised BPCI was successful, the results of our partnerships as a risk-bearing BPCI convener have and continue to exceed expectations,” says Richards. “With the more than 50 hospital partners we’re working with across the country, we’ve helped achieve more than $83 million in total annual gross savings while improving the quality of care for patients. With the recent BPCI Advanced announcement, we’re particularly encouraged by CMS’ emphasis on care redesign and tying performance to more quality measures – measures that go beyond just ‘checking the box’ and that really put the patient forward.

“BPCI provides the unique opportunity for providers to drive change and improvements in healthcare,” he continues. “Whatever the arrangement, we’ve seen a real coalescence around a program like BPCI – one that is shared across the continuum by all providers in that we can continue to do better in patient outcomes, patient quality and in driving value.”

Says Hiller, “We have witnessed incredible success for those organizations who ‘crack the code’ for bundled payments, both in medical bundles and surgical bundles, thus proving the bundled-payment model is a triple win for hospitals, physicians and patients. Some providers find the concepts of bundles to be the way care should be coordinated across the continuum – applying many bundled payment-like concepts to other service lines.

“The disappointment may come for those organizations that are unable to gain leadership and organizational alignment in time to succeed and make a difference in their bundled payment program. Timing is everything and is crucial to success.”

Bundled payments programs: Not a side project

Bundled payment programs are not for the weak of heart or for health systems lacking solid leadership. A study in the Journal of the American Medical Association in January reported that only 12 percent of eligible hospitals signed up for the voluntary BPCI program, and 47 percent of them dropped out within two years.

“The BPCI national trend factor (which has been modified for BPCI Advanced) continued to create downward compression on the target prices in the later years of BPCI,” says Mark Hiller, vice president of bundled payment services at Premier. “These diminishing returns were most likely one of the primary factors related to an early departure.

“In addition, internal organizational alignment is critical. There are negative implications for a hospital if bundled payments are treated as a side ‘project’ versus a dedicated, systemwide endeavor. We have found that some of these factors contribute to a hospital’s success compared to those that drop out of the program.”

Says Clay Richards, CEO and president, naviHealth, “Many hospitals did not choose to participate in BPCI due to the nature of uncertainty and perhaps the perceived inability to influence post-acute outcomes. For those hospitals that did participate, several may have jumped into the program not understanding the full scope of participation, or perhaps engaged without convener support, or without adequate preparation to implement the processes and capabilities required to impact post-acute outcomes.

“In our experience, those health systems that remained in the program have seen steadily increasing results as adoption of care redesign has increased and alignment of stakeholders across the continuum has improved. CMS has solved some of the pricing uncertainty and transparency concerns that are present in BPCI. There’s also an aspect of time and care delivery trending toward value-based care. As payers continue to incentivize this type of care, there will be greater and greater uptake.”

Readiness for change
A readiness for change is perhaps the most significant predictor of a health system’s success with bundled payment programs, says Gina Bruno, vice president, clinical strategy, naviHealth.

“Successful hospitals and those that appear most ready for BPCI Advanced have made an organizational commitment to value-based care and have worked to foster a culture change, where care is managed and coordinated across the recovery journey.”

They have invested in clinical decision support technology as well as clinical resources – including care coordinators or care navigators – to drive more informed decisions about post-acute care, and to monitor patients’ post-acute progress, says Bruno. In addition, they are selecting post-acute providers with consistently high outcomes, with the staff and resources to meet the needs of their patients, and a willingness to work collaboratively to use data to monitor performance.

That said, patient choice remains paramount; patients and their families are the ultimate decision-makers about who will provide their post-acute care, she says.

“It’s not an easy task. Many systems have taken months if not years to formulate these processes and all that comes with it. But they realize that there is benefit to doing this work beyond just Medicare and BPCI.”

A new look

BPCI and BPCI Advanced share a number of features. For example, both are voluntary programs, and both allow hospitals or physician group practices to assume responsibility for bundles of care. However, BPCI Advanced diverges from BPCI in several ways:

  • BPCI Advanced establishes the first-ever outpatient episodes – percutaneous coronary intervention, cardiac defibrillator, or back and neck except spinal fusion – all of which are identified by a Healthcare Common Procedure Coding System, or HCPCS, code. Additional clinical episodes may be included in future model years.
  • BPCI Advanced is an Advanced Alternative Payment Model (Advanced APM) under the Quality Payment Program. In addition to the potential for participants to receive payments under the model, eligible clinicians who meet threshold levels of participation in BPCI Advanced for a year will receive a 5-percent APM incentive payment under the Quality Payment Program (available for payment years from 2019 through 2024).
  • BPCI Advanced will take into account patient case mix. Preliminary target prices will be provided in advance of the first performance period of each model year and will be adjusted during the semi-annual reconciliation process to calculate a final target price that reflects patient case mix during the applicable performance period.

Lessons learned

What are the top three lessons learned by providers in bundled payment programs over the last five years? Per Clay Richards, CEO and president of naviHealth, a Cardinal Health company, they are:

  1. Don’t underestimate the importance of data analytics. Hospitals need to compare their data against national and regional benchmarks to identify high-cost areas that can benefit from clinical interventions and care redesign. This includes drilling into the data not only by episode, but also by individual physician. A successful game plan for the program begins with the data.
  1. Hospital leadership must be committed to true change management, and must demonstrate a willingness to think outside the box in terms of care improvement. Episodes of care should be designed holistically around the patient, which requires a mix of new methodologies and capabilities for hospitals – ones that demand an increasing focus on individualized care plans and post-discharge planning, with the goal of returning patients to the highest functional status while preventing unnecessary complications and readmissions.
  1. Hospital leadership must understand that continuous process improvement takes time. They need to commit to high quality value-based care, and they need to evolve as BPCI Advanced continues to change.

The 32 Clinical Episodes

The 29 inpatient Clinical Episodes in BPCI Advanced are:

  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 hemorrhage
  16. Gastrointestinal obstruction
  17. Hip & femur procedures except major joint
  18. Lower extremity/humerus procedure except hip, foot, femur
  19. Major bowel procedure
  20. Major joint replacement of the lower extremity
  21. Major joint replacement of the upper extremity
  22. Pacemaker
  23. Percutaneous coronary intervention
  24. Renal failure
  25. Sepsis
  26. Simple pneumonia and respiratory infections
  27. Spinal fusion (non-cervical)
  28. Stroke
  29. Urinary tract infection

The three outpatient Clinical Episodes are:

  1. Percutaneous coronary intervention (PCI)
  2. Cardiac defibrillator
  3. Back and neck (except spinal fusion)
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