New Bundled Payment Initiative: Why You Should Care

Regulation | October 16, 2018 | by Nicole Fallon

In its latest Medicare bundled payment model, Bundled Payments for Care Improvement-Advanced (BPCI-A), the Center for Medicare and Medicaid Innovation (CMMI) limited the role of post-acute care providers to that of "convener", preventing PAC providers from leading bundling arrangements as "episode initiators". Although this development is disappointing, it doesn't mean post-acute care and long-term services and supports providers will be unaffected or cannot be involved.

Here are few key points to understand about BPCI-A:

  • All providers will still be paid Medicare fee-for-service rates. Just because the hospital or physician group practice is initiating a bundle doesn’t mean that they are responsible for paying all the providers of services covered by the bundled payment.  All providers continue to be paid by CMS under Medicare fee-for-service rates.
  • BPCI-A participants probably will seek to achieve savings by changing PAC patterns. While BPCI-A entities don’t pay providers, they will try to control claims made to Medicare. For example, skilled nursing facilities are paid a per diem rate.  Therefore, if the BPCI-A entity is able to shorten the number of days of SNF care a bundled payment patient receives, the total cost for the episode is reduced.  However, if the patient is readmitted to the hospital, this cost will be added to the episode cost and will likely result in the BPCI-A entity having to repay CMMI for exceeding the cost target.  Therefore, it is in the best interest of the bundled payment initiator to ensure patients receive appropriate care.
  • Most bundles are triggered by a hospital stay. With the exception of 3 outpatient episodes, the majority of episodes under BPCI-A are triggered by a hospital stay, which is typically the most costly service in the episode and is paid as a flat rate payment (DRG). Therefore, hospitals have limited ability to lower the episode costs by changing the number of days an individual stays in the hospital. Under BPCI-A, a cost target is set for all services included in the episode.  CMMI keeps a tab, adding up all the fee-for-service costs it pays for episodes covered by the BPCI-A entity. If at the end of the period, the claims paid exceed the established cost target, the BPCI-A entity must pay the excess back to CMS.  If the BPCI-A claims total less than the target, the BPCI-A entity (hospital or physician group practice) receives a check from CMS for the difference.  
  • BPCI-A participants can waive the 3-day inpatient stay requirement to access skilled nursing facility care.
  • BPCI-A participants' final gain share will be contingent on their quality performance. Therefore, they will be cautious about discharging patients to a home setting (e.g., assisted living or other long-term services and supports setting) if there is any concern that the person will be readmitted to the hospital. The BPCI-A entities' performance on hospital readmissions plus 6 other measures will determine how much of any savings they are able to keep.

PAC providers serving areas where hospitals and physicians have opted to participate in BPCI-A will need to prepare for some of the following potential changes in service delivery in their markets:

  • Care substitutions to reduce cost of care for an episode, such as bypassing skilled nursing facilities and sending patients directly from the hospital to the home, with or without home health care.  This could impact the volume of post acute care – increasing home health episodes while reducing skilled nursing facility admissions.
  • For post-acute care provided in skilled nursing facilities, BPCI-A participants will choose to send patients to SNFs that can demonstrate shorter lengths of stay and reduced hospital readmissions. Skilled nursing facilities accepting patients under these circumstances may experience more churn due to the short timeframe between patient admission and discharge, and also may be expected to care for patients with more complex needs in order to prevent rehospitalization.
  • BPCI-A participants may establish new care transition and care management protocols as a condition for skilled nursing facilities to receive their patients.
  • The upside of these changes is that hospitals and physician practices may also provide convenient access to physicians, nurse practitioners and physician assistants on-site at the skilled nursing or assisted living facility or to support home health providers to avoid unnecessary rehospitalizations.

The BPCI-A model is scheduled to run October 1, 2018 through December 31, 2023. It covers 32 clinical episodes (29 inpatient, 3 outpatient). The most commonly selected episodes by BPCI-A participants include: major joint replacement of the lower extremity, congestive heart failure, and sepsis.

CMMI has signed agreements with nearly 1,300 entities, including 832 acute care hospitals and 715 physician group practices, to participate in BPCI-A.  The BPCI-A model will be tested in 49 states, Washington, DC; and Puerto Rico.