Participating health systems and health plans in the Centers for Medicare and Medicaid Innovation (CMMI) Bundled Payments for Care Improvement (BPCI) process need to recognize they have been presented with a new landscape that presents significantly higher financial risk.

When CMMI announced new definitions for the BPCI proposed episodes it reflected a new, broader strategy. These changes made to the definitions will impact payment for readmissions, include more Medicare Part A and Part B services into an episode payment, and increase the inconsistencies in the criteria for DRGs and the related diagnoses. The wider inclusion criteria combined with the complexity of inconsistencies adds up to significantly higher risk exposure for participating providers. It is now more likely that services provided to patients will be reimbursed at the bundle’s fixed price versus fee for service. Providers should proceed with caution to understand how the new inclusions and exclusions criteria, as well as the impact of proposed policies for sample size and episode price adjustments on the episodes they are considering as part of their participation in the BPCI.

BPCI Changes Presenting New Risks 
Our experts conducted an extensive analysis of the new inclusions, exclusions and conditions in the CMMI newly proposed episode definitions and identified the following list of risk concerns: 

• Wider inclusion criteria. CMMI’s broader episode definitions mean more of the provider’s claims are likely to fall under the bundle’s fixed price vs. fee for service. The more claims filed for the same bundled payment, e.g. when the patient requires the full range of included services, the greater the potential for less yield and margin overall for the provider, per service line and per bundle.
• Highlighted Example: The episode for a total hip and knee replacement surgery now includes 502 MS-DRGs and 9,337 diagnosis codes, many of which are clinically irrelevant to the index condition.
• Readmissions. The newly released episodes address readmissions in a very broad manner, with the majority of definitions including all medical DRGs, regardless of whether the readmission conditions are relevant to the index condition. That means readmissions stemming from cancers, behavioral health, trauma and HIV treatment could end up as one episode payment.
• Highlighted Example: A patient’s services are included in an Acute Myocardial Infarction (AMI) bundle. If that patient is readmitted to the hospital for chemotherapy to treat cancer during the bundle duration the chemotherapy services will be included in the AMI bundle.
• Inconsistent Exclusion Criteria. There are many inconsistencies in the exclusions between DRGs (Medicare Part A) and diagnoses codes (Medicare Part B) for the same services. Case in point: Cancer diagnoses were excluded from Part B, but the cancer medical DRGs are still listed as included.Moreover, there are many exceptions where relevant Part B services are not included in the episode definition and should be billed as fee for service. Both instances create complexity for the provider to submit claims appropriately.
• Highlighted Example: The services the patient receives for their cancer treatment at a physician office are excluded from the bundle payment. Those same services are included in the bundle when the patient receives them as part of an inpatient stay.
• Highlighted Example: The new proposed diabetes definition does not include diabetic retinopathy. Sinusitis and many other respiratory conditions are not included in the new definition for COPD, Asthma and Pneumonia and must be billed as fee for service.

What are CMMI Applicants to do?

• Re-analyze patient data against CMMI’s new proposed changes to better understand how new inclusions, exclusions and conditions would impact the episodes that are being considered for program participation. Conducting re-analysis supports “eyes wide open” when selecting optimal episodes, finalizing applications and more informed negotiations.
• Do not wait. It is urgent to re-analyze patient data prior to episode submission by applicants to CMMI on Wednesday, Nov. 28. Final selection of episodes and episode-initiating partners must be made.
• Keep Deadlines. Make sure your organizational plan for participating in the BPCI accounts for critical dates. Below for reference is a timetable.

MedAssets is providing assistance to participating health systems on this issue through our robust modeling capabilities, and by careful evaluation of the potential for increased risk associated with the new CMMI episode definitions and policy changes. If your organization is participating in the BPCI program, please visit this link to request a CMMI re-analysis by our experts to support your organizational success.

You also can click here to request a Summary of Episode Changes from MedAssets. This document provides an overview of the new definition impact to readmissions, inclusion of additional Part A Services, inclusion of Part B Services, and inconsistent exclusion criteria for DRGs and related diagnoses.

Upcoming Critical Dates for CMMI Applicants:

• Oct 22 – Nov 2, 2012       CMMI will hold two webinars a week to keep candidates updated
• Nov 5 - Nov 16, 2012       CMMI will hold individual candidate awardee interviews
• November 28, 2012         Feedback required from all candidate awardees (Clinical episodes and episode-initiating partners may be added at this time, as well as special model considerations)
• January 10, 2013: Candidate profile must be returned to CMMI
• TBD: Awardee agreements and implementation

Click here for more information on CMMI and Bundled Payments.

Gilbert D’Andria, senior vice president, B2B Partnerships, MedAssets