The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

 

CMMI Releases Updated Baseline Pricing for Bundled Payments

By Truven Staff
David Jackson imageOn May 1, 2014, the Center for Medicare & Medicaid Innovation (CMMI) released Model 2 and Model 3 Mock Reconciliation Results for Q2 2013 to provider organizations going at risk under Phase II of the Bundled Payments for Care Improvement Initiative (BPCI). While the results shared were intended to be informational and to help awardees better understand the reconciliation process, reported changes in baseline target prices raised a few eyebrows across the community of BPCI stakeholders. CMMI notified participants that the 2012 baseline prices were different than previously reported to awardees in August of 2013 due to changes in baseline episodes assigned to participants. Specifically, those participants who had entered into risk agreements (Phase II) have precedence over not risk bearing (Phase I) participants in assignment of episodes. However, there were also notable changes in case mix weights, historic trend factors and risk track thresholds for the 2010 – 2012 baseline period. The combined impact of these changes may significantly impact  2012 baseline target prices. Depending on the direction and magnitude of impact, the financial savings or loss projections for a given participant may change. We recommend all participants revisit those initial projections as part of their work to create a process for ongoing reconciliation.

Many of the BCPI stakeholders were under the impression that target prices reported in August 2013 were in essence “locked in,” so they were surprised to see some target prices driven down, in some cases significantly, for key higher volume DRGs, as we observed for major joint replacement surgeries. Lower than expected target prices ultimately mean lower than expected hard-earned savings a participant may recoup as a result of care redesign and coordination efforts.

According to CMMI representatives, upon advice from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), CMMI switched from deriving national historic episode statistics from a national random sample of 7,000 cases per DRG to the entire national universe of all Original Medicare episodes. The switch in national baseline episodes altered the historic trend factors, case mix weights, and risk track trim points affecting calculated target price, in some cases unfavorably. CMMI has commented that this degree of change was unexpected, but is a one-time occurrence and is not expected to change to this degree in the future. CMMI will continue to utilize the national episode universe baseline. While the shift to a national universe for establishing trend is positive, we believe CMS should consider an additional change to exclude participants from the trend calculation. Furthermore, we believe participants should anticipate substantial variation in quarterly financial results especially for low volume episodes and plan accordingly.

On the plus side, CMMI is making strides in providing greater resources to support participants through more frequent engagement and development of feedback mechanisms to help them understand how they stand in comparison to other episode initiators participating in the BPCI program. CMMI has established dedicated representatives, who will each work with approximately 25 awardees, to schedule regular discussions. They hope to have additional feedback mechanisms available for the first reconciliation time frame. In the meantime, to help drive success, it’s important for all BCPI participants to stay proactively engaged with CMMI and express their concerns and needs around information.

As organizations attempt to predict the financial success and the impact on their relationships with other participating providers through gain sharing or other business arrangements, they must keep track of many moving parts. Target prices will continue to be a moving target and CMMI will only be able to provide the final target prices quarterly, along with each retrospective reconciliation period. So it's important for the BCPI community to establish internal forecasting processes and request additional information, for example, historic quarter to quarter trend factors to better assess potential pricing volatility. CMS has invested heavily in providing data that when used to its full potential, can help facilitate positive transformation.

But it’s imperative for participants to monitor the impact of changes or clarification to BPCI program policies and to provide feedback. We encourage you to share your thoughts with CMMI. The e-mail address for feedback and questions regarding the BPCI program is BundledPayments@cms.hhs.gov.

David Jackson
Senior Consulting Manager

CMS Bundled Payment Program Re-Opens, But What Should You Include In Those Bundles?

By Truven Staff
Michael Taylor imageDid you miss out on enrolling in one of the Centers for Medicare & Medicaid (CMS) Bundled Payment programs? You’re in luck. The CMS recently announced that they are offering another chance for new participants to enroll in its Bundled Payment for Care Improvement (BPCI) program.

The aim is to provide financial incentives to all providers of care — hospitals, doctors, and post-acute care providers — encouraging them to work together. This represents the ongoing CMS trend of developing new payment models that move away from fee-for-service. The agency also hopes that increasing the scope of the program will result in a richer data set that would improve its evaluation of the new payment models.

There are four basic models of bundled payments, although the re-opening is only accepting enrollment in models 2-4; not model 1:
  1. Acute care inpatient stay — similar to traditional Medicare payment model. In this model, all participants agree to accept a discount from the standard payment, but there can be gain sharing if collaboration reduces costs. Physicians are paid on a reduced Medicare level, but under fee-for-service rules, and hospitals are paid under the DRG system.
  2. Inpatient stay plus post-acute care for 30, 60, or 90 days post-discharge. Each bundle is assigned a certain predetermined payment level, and compared to actual costs.
  3. Post-acute care stay. In this model, the bundled payment is for the skilled nursing facility or long-term acute care only, not the inpatient stay.
  4. Acute care stay only. In this model, CMS pays a lump sum to the hospital for all services provided, including physicians.
This payment methodology is similar to capitation in that it shifts varying degrees of the financial risk to the providers of care and incents better oversight of the care. Under this arrangement, providers are incentivized not to provide unnecessary tests or procedures.

What to Include In the Bundles
One of the challenges with bundled payments is deciding what to include in the bundle — there are 48 different chronic conditions that can be included in the bundled methodology! At Truven Health Analytics™, our teams have done considerable work in defining how to construct these bundles. Our researchers have worked on bundles covering coronary artery bypass, heart valve replacement, defibrillator and pacemaker in-plants, and joint replacements, so Truven Health is well-positioned to support this new opportunity. Truven Health has very strong references and demonstrable expertise in this arena, as we have helped several other clients in the application and ongoing measurement for the program. We offer a well established set of services and deliverables that have been successfully delivered to multiple clients.

Re-opening the opportunity for new participants at this time will expand the breadth of these programs. There are currently 61 sites across the country participating, and gathering more data on outcomes will be fundamental to evaluating its success. CMS continues to drive fundamental changes in payment reform, helping to transition away from the waste and excesses driven by fee-for-service. Will you decide to participate?

Michael L. Taylor, MD, FACP
Chief Medical Officer

CMS Bundled Payment Program Re-Opens, But What Should You Include In Those Bundles?

By Truven Staff
Michael Taylor imageDid you miss out on enrolling in one of the Centers for Medicare & Medicaid (CMS) Bundled Payment programs? You’re in luck. The CMS recently announced that they are offering another chance for new participants to enroll in its Bundled Payment for Care Improvement (BPCI) program.

The aim is to provide financial incentives to all providers of care — hospitals, doctors, and post-acute care providers — encouraging them to work together. This represents the ongoing CMS trend of developing new payment models that move away from fee-for-service. The agency also hopes that increasing the scope of the program will result in a richer data set that would improve its evaluation of the new payment models.

There are four basic models of bundled payments, although the re-opening is only accepting enrollment in models 2-4; not model 1:
  1. Acute care inpatient stay — similar to traditional Medicare payment model. In this model, all participants agree to accept a discount from the standard payment, but there can be gain sharing if collaboration reduces costs. Physicians are paid on a reduced Medicare level, but under fee-for-service rules, and hospitals are paid under the DRG system.
  2. Inpatient stay plus post-acute care for 30, 60, or 90 days post-discharge. Each bundle is assigned a certain predetermined payment level, and compared to actual costs.
  3. Post-acute care stay. In this model, the bundled payment is for the skilled nursing facility or long-term acute care only, not the inpatient stay.
  4. Acute care stay only. In this model, CMS pays a lump sum to the hospital for all services provided, including physicians.
This payment methodology is similar to capitation in that it shifts varying degrees of the financial risk to the providers of care and incents better oversight of the care. Under this arrangement, providers are incentivized not to provide unnecessary tests or procedures.

What to Include In the Bundles
One of the challenges with bundled payments is deciding what to include in the bundle — there are 48 different chronic conditions that can be included in the bundled methodology! At Truven Health Analytics™, our teams have done considerable work in defining how to construct these bundles. Our researchers have worked on bundles covering coronary artery bypass, heart valve replacement, defibrillator and pacemaker in-plants, and joint replacements, so Truven Health is well-positioned to support this new opportunity. Truven Health has very strong references and demonstrable expertise in this arena, as we have helped several other clients in the application and ongoing measurement for the program. We offer a well established set of services and deliverables that have been successfully delivered to multiple clients.

Re-opening the opportunity for new participants at this time will expand the breadth of these programs. There are currently 61 sites across the country participating, and gathering more data on outcomes will be fundamental to evaluating its success. CMS continues to drive fundamental changes in payment reform, helping to transition away from the waste and excesses driven by fee-for-service. Will you decide to participate?

Michael L. Taylor, MD, FACP
Chief Medical Officer

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