The recent announcement from the CMS that the Bundled Payments for Care Improvement Advanced (BPCI-A) model will be extended for two years is sparking new interest in an alternative payment model (APM) in which providers across the country have participated since 2018. In the last few years, BPCI-A has undergone significant policy changes, with additional revisions to come as it launches its third and final application for new participants to join.
In early 2018, the CMS announced the launch of the BPCI-A model, a voluntary bundled payment program developed in a similar fashion to the original BPCI and Comprehensive Care for Joint Replacement (CJR) programs. BPCI-A brought new opportunities for hospitals and physician group practices to share financial gains for successfully coordinating care and reducing CMS expenses incurred during the 90-day episode.
As a voluntary model, BPCI-A launched two application cycles in 2018 and 2019, allowing qualified providers to apply and select episode groups in which to participate. In these application processes, participants selected from among more than 30 predefined inpatient and outpatient clinical episodes, examples of which were sepsis, spinal fusion, and cardiac arrhythmia. Each BPCI-A patient had a unique target price established based on the type of clinical episode, patient characteristics, and coded comorbidities. Participants that spent less than the target price in aggregate earned a financial reward and participants that spent more paid a financial penalty. This approach yielded favorable results for many BPCI-A participants, as many participants selected episodes for which they had a historically positive performance and advantageous target price fundamentals.
In the first two years, CMS paid $567 million in BPCI-A bonus payments to participants and stated in 2020 that unless significant changes were made, the program would incur a $2 billion loss over its five-year duration.1 These CMS losses are generally attributable to its financial reward payments to participating providers; in other words, providers significantly outperformed initial financial estimates.
To correct for its predicted loss, CMS implemented several modifications starting in 2021, including:
- Clinical Episode selection by service line groups (CESLGs): Participants were required to select CESLGs, instead of one or more clinical episodes as in past years. For example, rather than singularly selecting participation in the congestive heart failure (CHF) clinical episode, participants were given the option to select the cardiac care CESLG, which included CHF, AMI, and cardiac arrhythmia. Selecting individual clinical episodes was no longer an option.
- Incorporation of a Peer Group Trend (PGT) Factor Adjustment: CMS began adjusting final target prices after episodes had ended to account for peer group trends. The intent of this change was to only incent performance that outpaced the general pace of change in patient episodes. This change caused target prices to fall for many participants.
Candidly, the impact of these policy changes hurt financial performance for many BPCI-A participants. Throughout 2021 and 2022, several providers and large convener participants—private companies that manage participation and bear risk on providers’ behalf—opted out of BPCI-A. In response to this disenrollment, CMS announced additional changes to the model in October 2022. The following BPCI-A policies went into effect on January 1, 2023:
- Increases in some target prices: CMS reduced its discount for medical clinical episodes from 3% to 2%; this has the effect of raising target prices for medical episodes, thereby making targets and profitability easier to achieve. The target price methodology for surgical clinical episodes remains unchanged.
- Reduction of PGT Factor Adjustment cap: Just two years after incorporating the PGT Factor Adjustment, CMS narrowed the maximum adjustment from +/- 10% to +/- 5%. In effect, this gives more target price stability and decreases the amount of retrospective change to targets.
- Inclusion of all COVID-19 episodes for reconciliation: As the pandemic has evolved, so too has CMS’ policy on holding participants financially responsible for BPCI-A patients with COVID-19 diagnoses. Effective in 2023, a COVID-19 diagnosis will have no bearing on a BPCI-A patient’s inclusion or exclusion in BPCI-A.
Finally, and perhaps most significantly, CMS announced its plans to both (A) extend BPCI-A by two (2) years through 2025 and (B) accept new applicants for January 1, 2024 start. These announcements will allow new and previously enrolled BPCI-A participants to apply for potential participation. On February 21, 2023, CMS released the Request for Applications (RFA) for the two-year extension, with a deadline to apply by May 31, 2023.
CMS’ announcement of a new BPCI-A enrollment window provides new opportunities for hospitals and physician group practices that have never participated in BPCI-A or who have participated in the past but are no longer participating. Like previous application cycles, applicants afford themselves choices:
- To participate or opt out later before bearing risk;
- to select individual CESLGs; and
- most importantly, to analyze historical claims data to understand the financial and clinical opportunities before agreeing to fully participate.
Unlike previous iterations of BPCI-A, the direct risk-bearing entities must be either Medicare providers/suppliers or Medicare accountable care organizations (ACOs). The aforementioned private convener organizations will be prohibited from playing direct roles in BPCI-A; this effectively gives provider participants like hospitals and physician group practices more control of BPCI-A decisions and potentially more responsibility toward achieving positive financial results.
For those organizations interested in exploring BPCI-A—not necessarily bearing risk, though full participation may be an eventual outcome—dialogue with a trusted advisor is strongly encouraged.
How FORVIS Can Help
Since 2012, FORVIS has served as a trusted advisor to many BPCI and BPCI-A programs and provides essential services to hundreds of bundled payment candidates to navigate participation, strategies, and financial opportunities. Many of our clients have achieved financial gains and continue to look for new bundled payment opportunities. Our team of experienced consultants is prepared to help interested applicants by:
- Application: helping to facilitate accurate and complete application processes
- Claims data benchmarking: analyzing historical data for opportunities against valid proprietary benchmarks
- Participation decision support: queueing up all relevant participation options
- Program development: advising on best practices for BPCI-A management
- Best practices: guiding participants on care pathways, clinical risk management, discharge protocols, waiver utilization, patient identification, and development of post-acute networks
- Provider alignment: increasing physician engagement and alignment through transparent data distribution and gainsharing
- Ongoing data monitoring: analyzing monthly claims data and validating semi-annual reconciliation payments
For questions or to learn more, please reach out to a healthcare professional at FORVIS or submit the Contact Us form below.
- 1CMS BPCI-Advanced, personal communication, September 10, 2022.