BPCI-Advanced:
Unpacking the Model Year 4 Changes

The Bundled Payments for Care Improvement Advanced Model (BPCI-Advanced) is a voluntary advanced alternative payment model that began in October of 2018, and is set to continue through 2023. The model serves Medicare fee-for-service (FFS) beneficiaries and allows participants to take on risk for the 90-day duration of up to 31 eligible inpatient clinical episodes and 4 eligible outpatient clinical episodes. Total Medicare FFS expenditures for the 90-day clinical episodes are reconciled against Target Prices, enabling participants to receive a single retrospective payment for their attributed clinical episodes, with payment reconciliation done on a semi-annual basis. 

In September of 2020, the Centers of Medicare and Medicaid Services (CMS) released updates to Model Year 4 of BPCI-Advanced, which went into effect in January of 2021. The model changes were designed to help ensure the program achieves its goal of providing Medicare savings without sacrificing patient care quality. The changes will mitigate participant clinical episode selection bias, improve Target Price accuracy, and help CMS ensure reconciliation payments are made as a result of true cost reductions versus participant regression to the mean.

Below is a breakdown of the five major changes made by CMS to Model Year 4, and the impact these changes will have on BPCI-Advanced participants.

Change #1: Clinical Episode Service Line Groups (CESLGs) 

The first major change to Model Year 4 is the creation of clinical episode service line groups. With this new change, the 35 BPCI-Advanced clinical episodes are bucketed into 8 clinical episode service line groups; cardiac care, cardiac procedures, gastrointestinal surgery, gastrointestinal care, neurological care, medical and critical care, spinal procedures, and orthopedics.

With this change, participants are now required to select clinical episode service line groups and must participate in all the clinical episodes within each grouping unless they do not meet the minimum volume threshold for any component clinical episode during the baseline period. Additionally,  participation in clinical episode service line groups will be locked in for three years, meaning participants cannot drop these groupings and still remain in the program. 

Change #2: New Clinical Episode Overlap Methodology

The second major model change is the introduction of a new clinical episode overlap exclusion methodology. In Model Year 4, CMS is excluding any clinical episodes that would have been normally triggered while a beneficiary has an ongoing separate clinical episode. This in effect means that no BPCI-Advanced clinical episodes will be overlapping. It is important to note that overlapping clinical episodes will be excluded regardless of whether the initial ongoing episode was attributed to a BPCI-Advanced participant or not. 

Change #3: Realized Peer Group Trend Adjustment

The third major change to Model Year 4 is the introduction of a retrospective peer ground trend adjustment. With the new update, CMS will adjust final Target Prices at Reconciliation for peer group trends found in Performance Period Clinical Episodes spending. This means that CMS will cap the difference between the realized retrospective peer-group trend factor from the preliminary prospective peer-group trend factor at 10% of the preliminary prospective trend. Peer groups are based on relevant hospital characteristics, such as region, size, academic medical center status, safety net status, and urban versus rural status.

Change #4: Removal of Physician Group Practice (PGP) Offset

The fourth major model change in Model Year 4 is that CMS will remove the PGP offset used in PGP target price construction. This means that each clinical episode category will have a single target price that does not vary irrespective of the individual PGP that triggered the episode.

This change will create the same Target Prices for PGPs as acute care hospitals (ACHs), except for their respective patient Case Mix Adjustments (CMA), simplifying the program’s pricing methodology and easily allowing for program scale. In terms of participant impact, this change could lead to possible increases in savings for historically efficient PGPs and a possible reduction in savings for historically inefficient PGPs.

Change #5:  Major Joint Replacement of the Lower Extremities Risk Adjustment

The final major program change is that CMS will add procedure flags to the Model Year 4 risk adjustment model for the Major Joint Replacement of Lower Extremities (MJRLE) clinical episode. This includes flags for; partial knee arthroplasty, total knee arthroplasty, partial hip arthroplasty, total hip arthroplasty and hip resurfacing, ankle and reattachments, and others. CMS will use these flags to improve the precision of the MJRLE clinical episode category risk adjustment and Target Prices.

In light of these recent changes, BPCI-Advanced participants should keep in mind two key considerations; the requirement of rapid financial assessments and decision making, and the likelihood that CMS will introduce mandatory bundled payment programs after the initial program conclusion in 2023. To help ensure they meet their programs’ clinical and financial goals, participating organizations should incorporate proper workflows and supporting infrastructures, and prepare for the future mandatory bundled payments value-based care programs that are to come.