Gina Intinarelli is a true believer in the impact of value-based payment models. She has seen them improve the quality of care for patients while reducing spending. However, just days after the launch of a new federal bundled-payment effort, she worries that her employer, UCSF Medical Center in California, may have to walk away.
The reason: The program is structured in such a way that UCSF is starting out more than $1 million in the hole.
March 12
: Application period closed
March-August
: Applicant screening period
July: Participants reviewed CMS’ program agreement
Oct. 1
: First cohort starts
March 2019
: Participants can exit program
Spring 2019:
Next application period opens
January 2020
: Second cohort begins
UCSF, where Intinarelli is executive director of population health and accountable care, is one of the hundreds of organizations that agreed to participate in the Bundled Payments for Care Improvement-Advanced model, which was the first advanced alternative payment model introduced by the Trump administration earlier this year. It launched Oct. 1. and is scheduled to run through Dec. 31, 2023.
The federal rollout was a bumpy one. The CMS was late in giving providers the claims data they needed to decide which care bundles to select under the effort. As a result, it agreed to let providers exit the model in March 2019 if they find it isn’t working for them.
The model includes 32 clinical-care episodes that providers can choose from, 29 of which are in inpatient settings and three in outpatient settings.
Providers had about two months from entering into final contracts in August to going live this month. As Intinarelli and her team started to dig deeper into the data the CMS provided and the target prices her system must meet, she made a startling discovery.
“We’re starting this at least $1 million in the hole that we would have to make up before we would ever get shared savings,” Intinarelli said.
She is trying to remain optimistic, hoping to at least break even under the model, but she is also keeping an eye on the exit just in case the outlook worsens.
- A single retrospective bundled payment and one risk track, with a 90-day clinical episode duration
- Participants are accountable for one or more of 32 clinical-episode models—29 of which are inpatient, three are outpatient
- Qualifies as an advanced alternative payment model for MIPS
- Payment is tied to performance on quality measures
- Preliminary target prices are provided in advance of the first performance period of each model year
Source: CMS
At issue is how the agency sets target prices. Unlike the original BPCI model, which based targets on an individual provider’s historical spending data, the new model establishes them using a far more complex methodology based on regression models, which adjust for patient case mix and spending trends at peer hospitals.
With the changes in place, the chance for rewards are high. The procedures outlined in the inpatient bundles account for more than 55%, or $70 billion, in annual Medicare spending, according to a January report from Archway Health, which assists providers with implementing bundled-payment initiatives. The model may end up saving the CMS as much as $2 billion and generate up to $15 billion of shared savings for providers.
However, there is some risk. Providers can only make money under BPCI Advanced if they keep total costs below a benchmark price, discounted by 3%. That’s a lower target price than in the current BPCI program, which includes just a 2% discount. They will be at risk for up to 20% of costs that exceed the target price.
“This resetting of targets is a race to the bottom in the sense that there isn’t enough to incentivize providers,” said Dr. Greg Sheff, chief medical officer at AccentCare, a BPCI Advanced convener and a home health and hospice provider. “I understand the desire for Medicare to push risk but at the same time you can’t create a situation where there is not enough viable opportunity.”
Jessica Walradt, program manager of value-based care at Northwestern Medicine in the Chicago area has similar concerns and is helping to lead a group of academic medical centers to lobby the CMS to address the pay issues.
As hospitals improve the care they provide under the bundles, there should be a floor on how low target prices can reach, Walradt said. Without that, they may continue to decrease at an unsustainable rate. “If there’s not a floor, then it’s going to keep moving the goal posts to such an extent that there won’t be sufficient room for providers to produce savings,” she said.
These concerns are causing providers, who previously experienced success in other Medicare bundled-payment models, to scale back or eliminate involvement in BPCI Advanced. “I think people are absolutely going to use the March off-ramp,” Walradt said.
A CMS spokesman did not return a request for comment on industry concerns.
Not everyone is worried about the target prices, with others noting that unlike the original BPCI, at least they know what their goals are. Under the last model, some providers were given initial goals, only for them to change later, according to Carter Paine, chief operating officer for naviHealth, a Brentwood, Tenn.-based convener company with more than 150 hospitals in BPCI Advanced.
Paine says the model is so attractive that around two-thirds of the hospitals his company is working with are entering into value-based care arrangements for the first time. “BPCI has been identified as this way of getting better clinical outcomes and make good money doing it,” Paine said.
Monterey, Calif.-based Montage Health is an example of a health system making its first foray into value-based care under BPCI Advanced.
Montage is the parent company of Community Hospital of the Monterey Peninsula and was drawn to the model after the CMS canceled a mandatory cardiac bundled-payment program that it had prepared to implement last year.
“We have been enhancing our ability to take on episodic risk, and the BPCI Advanced program was a natural opportunity to test those abilities,” said Matt Morgan, vice president of finance at Montage Health.
Others say they’re pleased with improvements made since the launch of the original BPCI. Those include a universal standard over how many days constitutes an episode of care, a streamlined list of bundles to choose from, and recognition that more procedures are taking place in outpatient settings.
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