Despite some initial difficulty in gaining momentum, the use of value-based payment methodologies will likely increase across all provider niches. This change is partly a function of cost savings driven by margin compression (e.g. inpatient care) as well as by government payment models rewarding quality and efficiency, such as the Medicare Access and CHIP Reauthorization Act (MACRA). Recent comments by Health and Human Services Secretary Azar suggest he finds that the results of the tested voluntary alternative payment models have been underwhelming and he may be ready for bolder payment programs to reform Medicare payments, including more mandatory programs. As the newest kid on the block of value-based payment programs, the Bundled Payment For Care Improvement–Advanced (BPCI-A) should be carefully assessed by and engaged in by providers for several reasons. We list six of these here.
1. Obtain Data
As BPCI-A is a voluntary Medicare program focused on a limited set of episodes of care, not all providers will want to make the investment of time and resources to assess if BPCI-A is worthwhile. Some may feel they will be challenged to achieve savings after Center for Medicare and Medicaid Services (CMS) mandatory 3% discount to historic fee-for-service charges for the selected clinical episodes. Others, including post-acute providers, may feel that gainsharing will not be pushed to downstream providers. Notwithstanding that, getting the data on provider costs from CMS for specific episodes and, if involved with a third party convener, benchmarking that data on readmissions, length of stay, locus of care and other care plan metrics with other providers, will only help to clarify the strengths, weaknesses, and strategy of providers receiving that data. In that sense, BPCI-A represents a very valuable, low-cost option to engage in as a market check for inclusion in the 2018 strategic plan. A decision whether to proceed ultimately with BPCI-A can be made at a later time, after receipt of the data. If a provider elects to proceed ultimately, it should be prepared to take downside risk for the selected episodes.
2. It’s Not Necessary to Boil the Ocean
Since BPCI-A allows the provider to ultimately select limited episodes of care to be included in the model, as compared to Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACO), for example, where all Medicare episodes are included, having the data on those selected episodes allows providers to be more strategic in the direction in which they seek to invest and expand both clinically and geographically. While laudable, a goal of being best-in-class across a broad swath of clinical diagnoses may not be achievable for all providers. In some cases, focusing on a select episode cohort can drive greater quality and greater savings. Having access to data empowers those choices.
3. Data to Assist With Plan of Care Redesign
Regardless of any ultimate decision to accept a bundle deal with CMS, having access to the data that are being provided, including a) readmission rates; b) discharge to Skilled Nursing Facilities (SNF) versus home health; and c) ER visit percentages by physician will ultimately empower hospitals to:
- Improve care coordination protocols
- Invest in technology
- Provide educational opportunities for identified physicians
- Develop possible strategies on acquisitions of providers or joint ventures.
This access allows hospitals to help ensure cost-effective post-discharge care. Without the data, hospitals are flying blind.
4. Engaging Post-Acute Providers
Under BPCI-A only acute care hospitals (ACHs) and physician group practices (PGPs) can be episode initiators. There is no bundled payment available for just post-acute episodes as was the case with Model 3 of original BPCI. As such, post-acute providers must partner with PGPs and ACHs as “Sharing Partners” to participate in any Net Payment Reconciliation Amount, as gainsharing is called. Although it’s likely that home health will continue to be an attractive lower cost venue for direct discharge from an ACH where clinically appropriate (thus generating savings by avoiding a SNF or IRF stay), providers with home health and/or SNF continuum capability (via either common ownership or contractual affiliation) will be well positioned to partner in BPCI-A with upstream providers. Whether this takes the shape of gainsharing is uncertain. What is certain is that post-acute providers that do not engage and embrace value-based payment in some fashion will be left behind over the long run as value based methods increase in both public and commercial payment plans.
5. Waivers and Gainsharing
Evaluations of the original BPCI models show that participants made little utilization of the available program waivers (e.g. 3-day hospital stay for SNF coverage, telemed, CMP waiver in certain instances for in-kind beneficiary inducements), nor was there much utilization of gain-share models beyond the PGP group. It’s likely that many of these initial bundle participants were in learning mode and sought to avoid the complexity of broader convener groups that would need access to the waivers to succeed. Now that BPCI-A still allows these waivers, the next generation of “advanced” bundles should make better use of the waivers which will presumably broaden the range of providers and relationships to permit greater creativity in care redesign. Undoubtedly, this is CMS’s desired objective.
6. Financial Markets and Investors Look for Advance Strategic Planning
Many investors, public and private, bond rating firms, and underwriters are increasingly field testing the percentage of a provider’s revenues that are risk-based both to assess that exposure and to assess if the provider has made plans for how value-based methods of payment could enhance or harm the bottom line. Investors generally welcome prudent and strategically sound alternative payment methodologies as part of the revenue mix and strategy plan. Alternatively, they view the absence of such planning as a red flag where vision and adaptability reward nimble operators.
If you would like more information on BPCI-A, we invite you to view our webinar recording highlighting the legal and business components of the program.