Skip to main content

Analyzing CMS’ Responses to Bundled Payment for Care Improvement: Is It Still A Good Deal?

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. 
CMS is also considering establishing episode prices that are a blend of hospital-specific and regional data, making the demonstration program look much more like a typical prospective payment system.

There is still time to provide feedback to CMS as they continue to develop the methodologies that will apply under the BPCI program.  CMS is accepting questions and comments, via e-mail, and we suggest facilities review the information they receive and understand its implications.  Many awardees have been granted interviews with CMS and they have until November 28 to notify CMS of their continued interest in participating in the program.  CMS expects that the Excel workbooks they provided with their own bundle calculations will provide the necessary information for awardees to make these decisions, and that checking the calculations is unnecessary.  Our best advice: proceed with caution and do your due diligence.

Episode Bundle Definitions and Prices:


Most hospitals expended considerable resources analyzing the claims-level data to identify care patterns, calculate prices, and determine whether they could achieve savings under a discounted price.  CMS has recalculated all episode prices using its own set of standard exclusions and outlier limits that are based on regional averages.  Eventually, CMS will need to trend those prices forward to the program year.  Awardees need to review these calculations for the following:
  • Can you match the CMS number?  
    • We have confirmed that CMS used the entire United States to identify episodes and calculate prices for candidate awardees; and
    • CMS is not currently using all of their stated methodologies in the calculations.
  • Is there still opportunity to achieve savings after all of the exclusions have been applied?
  • Are there additional exclusions that should be applied, such as cancer Diagnosis Related Groups (DRGs)?  CMS has since issued new episode group definitions with some additional exclusions.
  • What factors will CMS use to trend the data forward?  Are they appropriate and complete?
  • How does the application of outliers affect the price and the opportunity to create savings?

Bundle Families:


The original Request for Applications was clear in requiring applicants to bid on all episodes within a Medicare Severity (MS)-DRG family; however, each DRG-based episode within the family must have its own price.  This limitation forced applicants to include episodes that might have smaller volumes.  For example, to include DRG 470 (major joint procedures without major complication or comorbidity (MCC)), applicants were also required to include DRG 469 (major joint replacement with MCC) despite the fact that the latter DRG has much fewer cases. CMS has now broadened the definition of family for some episodes, creating even more small sample sizes - the smaller the sample size, the greater the risk that results will not be based on effective medical care.  For example, the CMS “COPD, bronchitis/asthma” episode family includes the bronchitis/asthma DRGs (202 and 203) in addition to the COPD DRGs (190-192), which increases the possibility of having DRGs with small sample sizes.  This increases the risk of participation in the BPCI demonstration, since the smaller sample sizes have greater variability.

Does the inclusion of additional DRGs for a particular family create too much risk to manage?

Regional Average Prices:


The inclusion of low-volume DRGs in the required families of episodes creates the problem of establishing bundled payment targets based on limited (or non-existent) historical data.  CMS proposes to solve this problem with the introduction of a blended pricing methodology, using regional average costs, or multi-years’ data, or both, combined with hospital-specific costs to increase the accuracy of the episode pricing targets.
The regional average prices are an interesting twist in the process.  CMS had explicitly warned applicants not to look at any data for hospitals other than themselves.  Now that data will be used to set outlier thresholds and “normalize” prices for those DRGs with significant variability.  If CMS chooses to use multiple years of data, how relevant is that older data to current practice patterns and how will blended prices be calculated?  CMS has not made those determinations yet, but they are proposing use of the Empirical Bayes statistical method.  Applicant awardees need to consider:
  • Can the regional averages be replicated/audited?
  • Will the industry have access to additional years’ data if CMS chooses this approach?
  • What is the range of potential prices for an episode, from lowest to highest, given different blend percentages?
  • How will the regional averages be adjusted for different wage indexes?  Will your hospital start out at a disadvantage because of this calculation?
  • How does your hospital-specific price compare to the regional average?  Will you start out at a disadvantage because your facility’s price is higher than others in your region?

The DataGen/Singletrack Team Approach


DataGen and Singletrack Analytics have been working together to closely monitor the proposed BPCI changes, develop models to evaluate the effects of these changes, and provide applicant awardees with the information they need to continue to assess their participation opportunities.  We provided data and analytical reports to more than two dozen applicants, and have worked with a number of clients through the application phase of the BPCI process. From this experience we have developed a thorough understanding of the data and analytics required to drive informed bundled payment participation decisions.  Through our interactive analytic models and consultative support, we keep our clients up-to-date on the effects of the proposed changes and support them through the CMS interview and response process.

According to CMS, the bundling and pricing methodologies are still preliminary and subject to change.  With the proper analytic support, you can help CMS craft a BPCI demonstration program that makes sense and works.  To be an active participant in the process, you need to understand it.   Let our team provide the information you need to confidently evaluate and make a solid business decision.

For more information, contact Gloria Kupferman at gkupferm@hanys.org or at (518) 431-7968.

Popular posts from this blog

BPCI Advanced – take advantage of the model extension now

The Bundled Payment for Care Improvement (BPCI) Advanced Model is now open for applications until May 31, 2023. This model provides a unique opportunity to acute care hospitals and physician group practices who are looking to: evaluate their bundle performance; rejoin if they have previously dropped out due to being under a convener; or take advantage of the changes to the model. With a small window to sign the participation agreement, you’ll need experts to process data quickly and accurately for evaluation. BPCI Advanced Program Details The Centers for Medicare & Medicaid Services (CMS) announced in October 2022 that this program will extend from January 2024 to December 2025. Data used for evaluation will be taken from the baseline period between October 2018 and September 2022. A participation agreement will be sent out in September 2023 and needs to be signed by October 2023 in order to participate. Those who apply before the May 31 deadline will benefit

You’ve been accepted to the Enhancing Oncology Model. Now what?

The Centers for Medicare and Medicaid Services Innovation Center recently announced approved applicants for the new Enhancing Oncology Model. If your facility has been selected by CMS, are you still weighing your options during the current baseline evaluation period?  Two deciding factors may include the program data that CMS provides and whether EOM is enough of an improvement over the prior Oncology Care Model to make your investment worthwhile. Another factor to consider: Will you have the resources in place to conduct a baseline evaluation before EOM’s program start on July 1, 2023? How EOM differs from OCM EOM aims to improve the coordination of oncology care, drive practice transformation and reduce Medicare fee-for-service spending through episode-based payment. It includes three major updates: Fewer cancer types. Compared with OCM’s 21, EOM will be limited to seven common cancer types: breast, prostate, lung, small intestine/colorectal, multiple myeloma, lymphoma and chronic le

3 Major Areas to Focus on After Receiving NCQA PCMH Recognition

First off, congratulations to you and your practice for achieving National Committee for Quality Assurance Patient-Centered Medical Home recognition! Gaining NCQA PCMH status is a big accomplishment for which you should be very proud. Now that you’ve completed the necessary steps to implement changes and earn recognition, you may be wondering what’s next. In this guide, we’ll navigate what to do next, PCMH standards and guidelines to follow and 2024 annual reporting requirements to focus on. Let’s get into it! What to do after earning NCQA PCMH recognition Before you’re ready to start earning the great benefits of PCMH recognition , you need to plan what actions you’ll take to maintain your status. Remember, PCMH is not a project, but a continual progression of the way care is delivered to patients, meeting them where they are. So, if you’re a practice that wishes to keep its PCMH, you’ll need to be accountable for each criterion you achieved when initially receiving PCMH recognition.