The Definitive Blog

Despite Meager Initial Savings, BPCI Program Could Have Bright Future

CMS just released the second analysis of its Bundled Payments for Care Improvement (BPCI) initiative, a program testing providers’ abilities to reduce costs for individual clinical episodes. The results aren’t as dramatic as some would hope, though they contain a few interesting findings. While hospital participants achieved statistically significant savings in only a handful of clinical episodes, their characteristics and reasons for joining give some indication of the program’s future and the industry’s outlook on bundled payments.

Though the limited number of participants and brief timeframe discourage any conclusive performance comparisons to that of providers outside the program, hospital participants did do well in some episodes. The most robust data comes from outcomes for major joint replacement of the lower extremity procedures, which 75 percent (81 total) of all hospitals selected as an episode. According to the study, the procedure represented an ideal area to target given that it is elective, meaning that potentially complicating co-morbidities wouldn’t be an issue, and that it has relatively standardized inpatient treatments and predictable outcomes. Over the 90-day period, Medicare payments for the episodes starting at BPCI hospitals were an average of $834 lower than at non-BPCI facilities. Payments for cardiovascular surgery were also slightly lower at BPCI hospitals for 30-day episodes, though longer episodes showed little difference. Financial results for all other categories of episodes were not statistically significant.

Though the financial indicators are as yet inconclusive, a look at the characteristics of BPCI hospital participants suggests a growing range of hospitals have a significant interest in the program. The 110 hospitals in the study participating in Model 2, the model which most hospitals selected, had roughly twice the average bed count of non-participants (359 vs 188) and 95 percent were urban facilities. In addition, they had almost double the number of admissions and higher standardized payments for episodes covered in BPCI in 2011, before the program was launched. For the roughly 350 hospitals in Model 2 today, the picture is slightly different and shows a broader interest among smaller organizations. According to Definitive Healthcare data, while 92 percent still classify as urban hospitals, the average staffed bed count has declined to 305. The percentage of for-profit participants has also increased slightly to 16 percent from 12 percent.

BCPI Model 2 Hospital Participants

2013-2014 Current
Avg Staffed Beds 358 305
Urban 95% 92%
Shared Savings Experience (ACO) 49% 69%
Non Profit 85% 77%
For Profit 12% 16%

Source: CMS Data, Definitive Healthcare

The study’s interviews with hospital participants on why they joined BPCI reveal some key themes. One is growing certainty that more capitated or bundled payment systems are on the horizon. Over half the hospital respondents said that the main reason they participated in the program was to learn more about bundled payments. Bundled payment structures are still a tiny minority of all reimbursement methods, comprising only 1.6 percent of all payments, according to a 2013 study. While many participants had experience with pay-for-performance and shared savings contracts, only 17 percent had been involved with bundled payments. Though the exact rate of current hospital participants with bundled payment experience is not easily determined, Definitive Healthcare data indicates that nearly 70 percent of them are part of a commercial or Medicare ACO.

Another takeaway from the interviews is that hospitals believe the greatest opportunity for episodic cost reduction lies with post-acute care. The idea is not surprising, given that most patients are only hospitalized for a few days out of the 30, 60, or 90-day episode period and nearly all hospitals now focus on how to reduce readmission rates. Accordingly, the study attributes savings in major joint replacement in the lower extremity and cardiovascular surgery episodes to lower post-acute care utilization and fewer discharges to institutional post-acute care facilities like SNFs and rehabilitation hospitals. Successful reductions depended upon close communication and shared goals between hospitals and post-acute care providers, even those who weren’t contractually obligated to be part of the program. The study cites that hospitals took various approaches to encourage cooperation with outside providers, including gainsharing or potential higher patient volumes, though some organizations were willing to assist without any explicit incentives.

Given that we only have results for the first few years of the BCPI program, the growth in participation and collaboration between hospitals and post-acute providers offer the most promise of success rather than any specific outcome measure. Like many of CMS’ Innovation Center programs, BCPI is best judged as a test of delivery reforms and provider capabilities rather than a vehicle to produce vast amounts of savings. So far, at least for hospitals, the BCPI has performed well by that standard.

Definitive Healthcare has the most up-to-date, comprehensive and integrated data on over 7,700 hospitals, 1.4 million physicians, and numerous other healthcare providers. Our databases track provider participation in multiple CMS initiatives, including Bundled Payments for Care Improvement, Comprehensive Care for Joint Replacement Model, and Meaningful Use.

September 23, 2016