Jonathan Pearce, CPA, FHFMA and Coleen Kivlahan, MD, MSPH
Many participants in “Phase I” of the Medicare Bundled Payment for Care Improvement (BPCI) program were surprised by their first look at the impact of CMMI’s BPCI precedence rules when comparing two sets of baseline data recently provided by CMS. This data show the number of episodes and target prices for episodes under two scenarios:
by Jonathan Pearce, CPA, FHFMA and Coleen Kivlahan, MD, MSPH
Applicants to the Medicare Bundled Payment for Care Improvement (BPCI) program will be busy spending December identifying episodes for which they should participate when they "go live" in April. Several episode families are common candidates for participation, and an overview of their characteristics is described below.
A new proposal for a permanent, voluntary Medicare bundled payment program was included in the discussion draft of a bill in the House Ways and Means committee. This proposal is similar to the current BPCI program, and has the following characteristics:
Achieving success in the Medicare Bundled Medicare Bundled Payment for Care Improvement initiative requires analyzing historical data to identify the opportunities and risks associated in each of the episode families, as well as the other decision points in BPCI participation. Careful evaluation of opportunities and risks before making participation decisions can pay off significantly when the at-risk period begins.
Most BPCI participants will undergo their first BPCI reconciliation in October, which will cover the first quarter of 2014. We’ve heard that some participants appear to be basing their ongoing participation in the BPCI program on these results. If a surplus occurs, they’ll stay in the program and may even add additional episode families. But if the results are negative, they’ll be jumping ship faster than the captain of the Costa Concordia.
In our previous article on this topic we discussed ways in which randomness in patient selection causes variations in average episode costs. Even for higher-volume DRGs, these variations can create significant differences in the settlement amounts during CMS reconciliations. In this article we describe a simulation methodology that allows estimating the extent to which these variations will occur.
The randomness in episode costs has always troubled the Singletrack Analytics team. Even for high volume episodes, randomness makes it difficult to gain a good understanding of financial performance. After CMS released the mock reconciliations, we started wondering how much variation would be present in the quarterly average costs that would be reconciled throughout the performance period. This triggered the analysis below.
"Shock and awe" were words that many of our clients used when they received their ”mock” reconciliation data from CMS in early May. Some were dismayed at the significant reduction in financial surpluses from those that were expected, while others were alarmed by several apparent policy changes that have been implemented without notice and after contracts were signed. This article will discuss what we expected to see, what we actually saw, what we see as the consequent effects on reconciliation, and where we believe policy changes must be forthcoming.