In this round of the Bundled Payment for Care Improvement (BPCI) project, Centers for Medicare and Medicaid Services (CMS) introduces outlier limits on episode costs Download This White Paper

The Centers for Medicare and Medicaid Services’ (CMS) responses to applications for the Bundled Payment for Care Improvement (BPCI) demonstration program have raised more questions than they answered.  While we understand the government’s need to reign in the myriad bundle definitions, the degree to which CMS has gone from “define your own” to non-negotiable specifics raises some significant concerns. CMS has: defined its own episode bundles and exclusions;  created required bundle families;  calculated regional average prices; and  established an outlier methodology. 

Considerable discussion has taken place during the Centers for Medicare and Medicaid Services (CMS) resource calls about which process to use when computing episode payment rates for low-volume Diagnosis Related Groups (DRG).  This is an issue because Bundled Payment for Care Improvement (BPCI) applicants are required to participate for all DRG severity levels within a selected episode definition, even though the applicant may have extremely low volumes for one or more of those DRGs.  Low episode volumes cause inaccuracies in calculating average prices and may create inappropriate advantages or disadvantages for the provider if its historical costs were extremely high or low.