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What’s next for bundled payment models?
The Bundled Payments for Care Improvement Advanced (BPCI-A) program has just closed applications for its second cohort of participants, and in March, allowed participants from the first cohort to elect to leave the program before taking on risk. Despite a 16 percent drop in enrollment, the program still has significant participation numbers with almost 1,300 providers remaining.
While alarming on the surface, this dropout was likely due to several factors. First, an extremely tight turnaround between when the program was announced and when applications were due probably led providers to apply before being able to fully analyze which episodes made the most sense to participate in. The risk of not being included in BPCI-A far exceeded the inconvenient possibility of dropping out. In fact, this was advice we gave our clients – to apply to every episode they could conceivably want to participate in, access the data feeds from CMS, then take the time to assess whether or not participation was the right move and withdraw if needed.
There’s a lot to gain from participating in bundled payment models, but also a lot to potentially lose. Organizations must weigh critical factors when evaluating the opportunities and risks with any model. If you’re considering BPCI-A participation with the next round of enrollment, you’re in luck – you have the time to make strategic considerations and fully analyze your data. The most important factors to keep in mind are:
1. Episode volume. You need to ensure you have adequate episode volume to protect yourself against a single, costly outlier episode. If your episode volume for any clinical episode category is small, one anomaly could easily wipe out any savings you’ve worked hard to achieve.
2. Fixed vs. variable expenditures. It’s also important to have a sound knowledge of your episodes’ fixed and variable expenditures. Focus your participation on those episodes where your variable expenditures represent a significant portion of the overall Medicare episode payment amount, as that’s where you’ll be able to make an impact.
3. Readmissions reduction. You’ll also need to have effective strategies ready to reduce readmissions for any episode-which requires knowing why, where, and at what point in the episode readmissions are most likely to happen.
4. Episode costs. Finally, a key ingredient in the recipe for success is knowing your average episode expenditures and how that compares to benchmarks. The best way to get an idea of this prior to participating in the model is to see how your expenditures compare to the averages in your region. If your costs are higher than the regional average, you likely have room to reduce expenditures closer to that average, meaning participation could be worthwhile. However, if your expenditures are already lower than the market average, you may not have as much to work with.
You should be able to address points 1-3 using your internal data. To address point four, you’ll need external market data to compare alongside your episode costs. To get started, you can use this free online episode evaluation tool to gain visibility into average episode expenditures for different clinical episode categories in local markets across the country. By entering your city or zip code and choosing the specific categories you would like to examine, you can see the regional or national average episode expenditure amount for that category. By comparing your own average episode expenditures with averages at the local and national levels, you can get a better understanding of potential opportunities and risks in BPCI-A participation.
Ultimately, success in BPCI-A is going to come down to how well you can gain an understanding of your own data, and how much control you have over variables that impact that data. Getting the big picture will be just as important as understanding the details if you are to make any monetary gains – or at the very least, not lose money. The good news is, the benefits of participating in BPCI-A aren’t just monetary. This is an opportunity for practice transformation, as well as an opportunity to get your feet wet under bundled payment models – since, as CMS as insinuated, mandatory programs aren’t far away on the horizon.
Alyssa Dahl is Director of Informatics at DataGen, a healthcare data analytics and policy firm.