Care Transformation Center Blog

Four reactions to the big BPCI expansion

by Rob Lazerow

Last week, CMS announced that thousands of providers were selected to join the Bundled Payments for Care Improvement Initiative (BPCI). More than 6,000 providers are now participating in Medicare’s voluntary bundled payment program, which offers providers a choice of four different bundled payment models for treating patients across episodes of care.

We’ve reviewed the updated participation roster and have four reactions to the state of the bundled payment program.

Need a bundled payment refresher?

Review what bundled payments are, how they differ from fee-for-service, and the potential benefits and pitfalls of working under this model.

Watch the video

1. BPCI is Medicare’s largest voluntary payment program once again

Following last week’s announcement, BPCI regained the lead as Medicare’s largest voluntary payment innovation program. With more than 6,000 participating providers, BPCI is considerably larger than Medicare’s ACO programs, which currently have 366 participating ACOs across the Medicare Shared Savings Program and Pioneer ACO Model.

But this hasn’t always been the case—participation in BPCI has fluctuated widely. The program initially launched with approximately 450 providers in early 2013, but participation dropped to 342 organizations in January 2014. CMMI then opened a second application period for the program, which led to this major expansion.

2. Few providers are actually receiving bundled payments in BPCI right now

Despite the big participation numbers, few providers are currently being reimbursed through bundled payments. BPCI has two phases, designed to give providers time to implement their bundled payment programs. During Phase I, providers don’t bear any financial risk. If participants transition to Phase II, which is optional, then they begin receiving bundled payments.

Right now, only 243 providers are in Phase II—that’s just 4% of total BPCI participants. However, the organizations joining Phase I are taking an important step toward implementing bundled payment programs.

3. Providers show limited interest in hospital-only bundling models

Although BPCI offers providers a choice of four different bundling models, few participants have selected Model 1 or Model 4, which both focus on inpatient care rather than the full care continuum. Only 15 organizations signed up for Model 1 and 17 for Model 4; together, these two models represent roughly 0.5% of total program participation.

Why the limited interest? Two main reasons.

First, both Models 1 and 4 have some practical disadvantages. In Model 1, participating hospitals face a price discount on every inpatient Medicare admission. In contrast, Models 2-4 allow participants to selectively choose among 48 different clinical conditions. So under Models 2-4, some providers are bundling for just one or two clinical areas, such as orthopedic or cardiac surgery. And Model 4 uses a true prospective bundled payment, meaning that participants need to collect the single bundle and distribute payments among partner providers. Models 2 and 3, however, use a retrospective (or virtual) bundling model, which is much less disruptive to existing revenue cycle operations.

Second, there are some strategic advantages to implementing more expansive bundles. If participants opt for Model 2, which includes post-discharge care and readmissions, they may enjoy more cost savings opportunities. And focusing on care spanning across the continuum may also have greater alignment with other ongoing initiatives, especially efforts to reduce readmissions or prepare for population health.

While adding in more care sites may increase the program complexity, many organizations have decided that the potential returns are worthwhile. Model 2 has the second highest participation—nearly 2,000 providers.

4. Post-acute care providers and physician groups continue to sign up in droves

Non-hospitals providers, especially post-acute providers (PACs) and physician groups, continue to join BPCI in large numbers. Although the program focuses on acute care episodes triggered by an inpatient admission, PACs and physicians have clear ability to reduce spending across the episode, particularly after discharge from the hospital. Model 3, which bundles for post-discharge care exclusively, is hands down the largest segment of BPCI. More than 4,000 providers have signed up for Model 3—that’s nearly two-thirds of the program’s total participation.

Get our bundled payment cheat sheet for post-acute providers

The growing participation by PACs and physicians groups likely relates to the broader payment reform landscape. In many cases, PACs and certain specialists, including surgeons, currently have limited formal roles in ACOs. But BPCI offers an opportunity for these providers to take the lead in payment innovation—and share in the additional value they create for patients and the Medicare program.

While BPCI still focuses on acute care episodes, strong PAC and physician participation shows that bundled payment isn’t just an opportunity for hospitals anymore.