CMS Proposes New Voluntary Bundled Payment Model

by Holland & Knight LLP

Holland & Knight LLP

On January 9, the Centers for Medicare and Medicaid Services (CMS) announced a new voluntary bundled-payment demonstration program, also known as Bundled Payments for Care Improvement (BPCI) Advanced. The new model will test a series of bundled payments for 29 inpatient and three outpatient 90-day clinical episodes, with the three outpatient-based episodes serving as unprecedented options (CMS has only implemented inpatient-based episodes in the past). Payment under BPCI Advanced will be tied to performance on seven quality measures, with the number of measures dependent on the clinical episode selected. CMS will have the discretion to modify these quality measures beginning in 2020.

The original BPCI program, a five-year program that began in 2013, included 48 clinical episodes under four care models with a blend of prospective and retrospective payment. In addition to the decrease in clinical episodes from 48 to 32, which was due mainly to insufficient volume in certain, usually non-surgical episodes of care, BPCI Advanced will be limited to acute-care hospital and physician group practice (PGP) participants as compared to the original BPCI program, which also allowed post-acute care participants. Further, BPCI Advanced will only exclude participation to accountable care organization (ACO) participants associated with a Next Generation ACO, Vermont All-payer ACO, ESRD Seamless Care Organization, or Shared Savings Program ACO under Track 3, thus allowing participants aligned with Shared Savings Program ACOs under Tracks 1, 1+, and 2. Excessive overlap between ACO and other models has been cited in the past as a potential barrier to ACO shared savings goals.

Finally, BPCI Advanced will qualify as an Advanced Alternative Payment Model (Advanced APM) under the Quality Payment Program (QPP), which was authorized by the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015. Advanced APMs serve as one of two payment tracks under the QPP that allow physicians to earn up to five percent in incentive payments if they assume some financial risk while also meeting minimum requirements for quality health care quality and the use of electronic health record (EHR) technology. Unlike First-round applications will be accepted until mid-March, with the first round of participation lasting from October 1, 2018 through December 31, 2023.

The introduction of BPCI Advanced comes after former Health and Human Services (HHS) Secretary Tom Price canceled both mandatory Episode Payment Models, acute myocardial infarction (AMI) and coronary artery bypass graft (CABG) surgeries, as well as the mandatory Cardiac Rehabilitation (CR) Incentive Payment Model on November 30, 2017. These models were originally scheduled to begin on January 1. HHS also cut the surviving mandatory model, Comprehensive Care for Joint Replacement Model (CJR), in half, shrinking participation from 67 geographic areas to 34. These actions were not a surprise as former Secretary Price, an orthopedic surgeon, had showed skepticism of the need for mandatory payment models while serving as a member of Congress from Georgia before assuming his role at HHS. This skepticism continued despite analysis showing that the CR model alone would have generated $170 million in savings to Medicare as a mandatory model. Further, turnover at HHS, including the departure of former Secretary Price, put the BPCI Advanced program in doubt as the Office of Management and Budget had held the program under review beyond its initially planned launch date for several months.  

Notably, in his confirmation hearing before the Senate Finance Committee on January 9 HHS Secretary-designate Alex Azar commented that he was open to the use of mandatory demonstration models, stating “if, to test a hypothesis around changing our health care system, [demonstrations] need to be mandatory as opposed to voluntary to get adequate data, then so be it.” Given these comments and the announcement of BPCI Advanced, there may be opportunities in the near future to engage in new, or redesign preexisting, mandatory payment models to curb health care costs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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