Matt Pesesky of Advisory Board's Health Care Industry Committee sat down with Hunter Sinclair, a Vice President in the Advisory Board's Value-Based Care Consulting practice and one of the presenters in our recent BPCI Advanced webconference, to learn what suppliers should know about the role of conveners in the new program.
Matthew Pesesky: Thanks for taking the time to talk, Hunter. Let''s start with the basics. What are bundled payments?
Hunter Sinclair: A bundled payment is a payment mechanism designed to encourage providers to reduce their total episodic expenditures (including internal costs such as those derived from implants) by providing a lump sum bonus if aggregate fee-for-service (FFS) costs are lower than an episodic benchmark (or a penalty if they are higher than benchmark). Medicare has routinely set up bundled payment programs because they have been shown to reduce providers' total spending on 90-day episodes.
Pesesky: What is a convener?
Sinclair: A convener is an organization that brings together multiple independent parties (like physicians, hospitals, and post-acute providers) that are involved in delivering care across an episode. The convener is then responsible for distributing the bonus or paying the penalty to the payer. In the original BPCI program, conveners played a significant role in bringing together organizations to participate—but conveners will now have an even larger role. The BPCI Advanced program has an incredibly short application period (applications are due on March 12) and will subject participants to immediate downside risk starting on Oct. 1, 2018. But, conveners can delegate only up to 50% of downside risk to participating organizations, which could significantly curtail convener participation.
Pesesky: So what types of organizations have historically been conveners? Do you expect that profile to change?
Sinclair: A lot of organizations can take on the role of convener, provided they have significant administrative capacity, financial reserves that allow them to take on risk, and are trusted by the various bundle participants. For example, a hospital or large physician group could serve as convener and rally local providers into an agreement. In the original BPCI program, some specialty associations, like the Academy of Academic Medical Colleges, brought together groups of like-minded hospitals. Third-party consultancies, like Remedy Partners, also acted as conveners for many participants in the original BPCI program (500 participants in Model 2 of the original BPCI program partnered with Remedy). There are actually very few restrictions on who can become a convener, and suppliers could conceivably serve as conveners under BPCI Advanced.
Many of the historic conveners from the BPCI program will likely migrate with their provider partners into a BPCI Advanced arrangement. There were also a number of collaborations that came together in preparation for mandatory cardiac or joint replacement bundled payment programs before those programs were either cancelled or scaled back. One of the biggest differences between the original BPCI program and BPCI Advanced is that post-acute facilities can no longer initiate episodes and may not be interested in serving as a convener on behalf of hospitals and/or physician groups.
In addition, the significant financial risk involved with becoming a convener in the BPCI Advanced model could discourage overall participation. On one hand, from the height of BPCI participation, over 80% of participants dropped out as downside risk was phased in. On the other hand, many organizations are starting to prove successful under bundled payment models and are likely to be better prepared to succeed under downside risk than a few years ago. Either way, the level of risk in the BPCI Advanced program should make organizations without the ability to directly inflect episodic spending (like consulting groups, specialty associations, and product suppliers) think twice before becoming a convener.
Pesesky: What types of suppliers should pay attention to this new model? Why?
Sinclair: Most suppliers should care. First off, the 29 inpatient and 3 outpatient clinical episodes cover a wide variety of procedures across almost every service line and cover around 49% of Medicare FFS inpatient discharges. Suppliers of high-cost medical devices frequently used in these clinical episodes are likely to face extreme downward price pressure with participating providers. Another difference-maker for BPCI Advanced compared to BPCI is the presence of MACRA, which already puts episodic cost accountability onto physicians. Physicians involved in BPCI Advanced agreements can use this program to qualify for the Advanced Alternative Payment Model (APM) track where they can earn a 5% bonus on all their Medicare fee-for-service revenue.
Every supplier should also be watching broader bundled payment trends. Past bundled arrangements have shown that physicians are often willing to choose lower-cost products if there are direct financial incentives. If these contracting models continue to be successful at curbing costs, suppliers can expect to see commercial payers and large health systems increasingly instituting bundled arrangements outside of the BPCI Advanced framework.
We recommend that supplier account management teams develop strategies for engaging customers who are interested in a bundled payment arrangement. At the very least, suppliers should redouble efforts to develop and provide cost effectiveness data over a 90-day episode. Others may want to pursue provider-supplier risk sharing initiatives that protect providers from supply cost outlier cases.
For some suppliers, that engagement may even extend to becoming conveners themselves. In most cases, there likely is too large of a trust gap, but some providers might be intrigued by the financial resources a supplier could provide. The downside for suppliers would be taking on risk where they could not directly control costs. However, if providers felt they could collaborate with a supplier to deliver a higher-quality, lower-cost care model and shifted all volumes to the supplier convener, that supplier could theoretically build a strong partnership, consolidate volumes, and share in performance bonuses.
Pesesky: What do the months ahead hold for BPCI Advanced?
Sinclair: We had more than 1,200 attendees for our BPCI Advanced webconference during the middle of the day on a Tuesday (including hospitals, physicians, and suppliers). If that''s an indicator of interest, CMS could see a lot of applications despite the short application window. New conveners—particularly non-traditional ones, like suppliers—are likely at a strong disadvantage due to the time crunch. We'd expect this round to primarily feature reprises of groups from previous bundle payment initiatives. However, the 2020 cohort may represent a more diverse set of convener participants. The quick turnaround will likely force suppliers who want to be conveners in 2018 to focus on independent physician groups with whom they already have strong relationships.
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Your questions about BPCI Advanced–answered
On Jan. 9, CMS announced BPCI Advanced as a voluntary bundled payment program that will qualify for the Advanced Alternative Payment Model (APM) 5% bonus under MACRA.
To help you understand some of the more specific nuances of this program, we've put together our answers to our members' most frequently asked questions.