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Has it been four months already? That’s when the first performance period began for CMS’ latest bundled payment model, BPCI Advanced. Now participants are less than a month away from the March 1 deadline. 

By March 1, they can drop participation in any (or all) of the 32 clinical episodes without penalty or financial risk. This “get-out-of-jail-free card"" expires soon. 

Here are four key elements your organization should consider.

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1. Performance trends and comparison to target price

CMS has only released a few months of claims data. That means that the average bundle is approximately 60-days mature within the 90-day period. Due to claims run-out and CMS’ data distribution process, most organizations will have limited information by the deadline. They’ll only have one month of fully mature bundle information."

One approach can aid in the decision to participate while overcoming data limitations. This involves developing bundle maturity models to project a bundle’s total allowed amount to full maturity. 

For example, based on historical data, the majority of costs for Major Joint Replacement of the Lower Extremity (MJRLE) are incurred toward the beginning of the episode. (The costs of the procedure itself far outweigh the expected costs of recovery). In fact, MJRLE episodes are expected to experience 50 percent of the overall episode costs by day ~6–7. 

Let’s say CMS provides six days of claims for an MJRLE episode. We project the overall episode expense to be two times the current claims allowed. 

In contrast, for stroke episodes, data suggests that by day six, claims are only 25 percent mature. This is due to longer inpatient stays and more significant costs incurred post-discharge. Therefore, we would multiply the allowed claims by a factor of four times to project a stroke episode’s overall expense. 

By using this approach, your organization can translate months of impartial data into a mature comparison to target price to better inform the episode selection process.

It’s also valuable to analyze trends for the key performance indicators that will have the most influence on episode costs. For example, to analyze overall bundle performance, look at:

  • Percent discharge to home and SNF facilities
  • An episode’s total allowed amount within the anchor time frame 

Comparing each of these metrics to your organization’s 2016 data or national benchmarks can determine whether either is trending above or below expectations. Ultimately, it can inform your strategy for the March 1 deadline. 

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2. Qualification for APM status

Many organizations are hoping to achieve Qualifying Participant (QP) status under an Advanced Alternative Payment Model (APM). This enables them to receive an automatic 5 percent payment bonus. Otherwise, they would be subject to Medicare’s Merit-Based Incentive Payment System (MIPS) reporting requirements and payment adjustments. 

In 2019, CMS’ thresholds for QP status indicate that you must receive at least 50 percent of all Medicare Fee-for-Service (FFS) payments. Or you must see at least 35 percent of Medicare patients through an Advanced APM entity.

The CMS calculation measuring QP status depends on your organization’s participation type in BPCI Advanced — Non-Convener vs. Convener and ACH vs. PGP. All get treated slightly differently. During 2019, CMS will provide three opportunities to attain QP status by performing a check at the end of each internal quarter. 

This allows for flexibility in Medicare attribution and/or payments throughout the year. However, the March deadline to drop episodes occurs before the first QP evaluation. Our suggested approach is to remain as conservative as possible if QP status is a desired strategic goal. 

Here’s an example. As you evaluate monthly CMS data, compare total allowed amounts for physicians on your QPP List to your organization’s total Medicare allowed for the same list of physicians over the same time period. Aim for a goal ratio of 60 to 65 percent (at least 10 percent above the QP threshold for 2019). 

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3. Successes in developing clinical pathways

In BPCI 1.0, the vast majority of achieved savings were associated with:

  • Decreases in SNF spending
  • Decreases in readmissions
  • Increases in home health spending

Driving results in these areas requires refined clinical pathways. These pathways should appropriately place patients post-discharge. They should also maintain patient engagement throughout the continuum of care into the home. 

It’s difficult to track readmissions and SNF spending this early in the 2019 performance year. But you can still evaluate your success in improving and launching new best practice care standards. 

  • What discharge protocols are your physicians following? 
  • Have you established a preferred SNF network? 
  • Do you have sufficient care navigator or care management resources following patients post-discharge? 

Answers to these questions will illuminate potential gaps or highlight early wins in your bundled payment journey.

One of the most crucial, and often overlooked, elements to improving clinical pathways is whether you’re accurately identifying bundle-eligible patients in a timely way. In a retrospective bundle environment, organizations must have the appropriate tools to identify patients as soon as possible.

Ideally, you will use the scheduling system for elective procedures or working DRGs in the EMR for emergent cases. You can also test the accuracy of your identification methods by comparing your curated list to the patient list within each month’s claims data. 

Once a bundle-eligible patient is identified, how and when are you communicating that information to the appropriate care management resource? Accurately identifying participants in a timely way and then communicating with care teams — these are critical factors to improve bundle management.

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4. Organizational appetite for risk

Some organizations selected bundles with significant target price advantages. Others joined to gain experience with this growing alternative payment model and the new operational challenges it brings.

For the latter organizations, the key decision-making criteria may be appetite for risk. In other words, how much of a potential loss could the organization take on while maintaining its current bundle selection? 

Bundles, like outpatient PCI, are relatively low-risk, as the target prices are generally low, with minimal volatility in total spending. In contrast, Hip & Femur or Large Bowel procedures are higher dollar with significantly more volatility. 

In contrast to the first bundled payment program, CMS is doing less to limit each participant’s exposure to risk. They’re doing this by only truncating episodes if they are less than the 1st percentile or exceed the 99th percentile in spend. (The previous program capped episodic spending at the 95th percentile.)

CMS is also capping aggregate losses at 20 percent of the total target price. That still creates significant downside risk. For a PGP participant, this amount could easily exceed the total professional billings for one practice.

In order to estimate risk exposure, our team uses Monte Carlo simulation models. These are based on historical experience to project the likely scenario. They also project the worst-case scenario of 20 percent losses.

Whether gaining experience in this program is worth this risk or not, we recommend seeking reinsurance to cover any excessive losses that could occur. Some financial protection is important. That’s particularly true if you’re looking at your participation in BPCI Advanced as an investment.

The above considerations are critical for the upcoming March decision. But they are also valuable in the business management of any selected bundles. You can talk with a consultant about BPCI Advanced, the 2020 application and information about how Optum can assist your organization with bundled payments, via our website.



About the author

Jordan Holland, MBA

Jordan Holland has been with Optum/The Advisory Board for more than five years. He partners with clients to provide clinical and financial modeling and analysis, business intelligence creation and optimization, and strategic decision-making on financially sustainable population health activities and programs. 

Mr. Holland has historically focused on clients with needs related to value-based transformational change, strategic asset growth and expansion, and managing clinical variation within the health system. 


Tag: Articles, Articles and blogs, Advisory services, Provider, Actuarial, Medicare, Value and transformational risk

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