Bundled Payments for Care Improvement (BPCI) Initiative: General Information

The Bundled Payments for Care Improvement (BPCI) initiative was comprised of four broadly defined models of care, which linked payments for the multiple services beneficiaries received during an episode of care. Under the initiative, organizations entered into payment arrangements that included financial and performance accountability for episodes of care. These models aimed to increase quality and care coordination at a lower cost to Medicare. For results of these models, please see the Evaluation Reports below.

Select anywhere on the map below to view the interactive version BPCI Static Map of all Models

Background

Traditionally, Medicare makes separate payments to providers for each of the individual services they furnish to beneficiaries for a single illness or course of treatment. This approach can result in fragmented care with minimal coordination across providers and health care settings. Payment rewards the quantity of services offered by providers rather than the quality of care furnished. Research has shown that bundled payments can align incentives for providers – hospitals, post-acute care providers, physicians, and other practitioners – allowing them to work closely together across all specialties and settings. In BPCI, an Awardee is the entity that assumes financial liability for the episode spending. Episode Initiators are health care providers that trigger BPCI episodes of care; they do not bear risk directly (unless they also serve as an Awardee) but participate in the model through an agreement with a BPCI Awardee. BPCI Episode Initiators include acute care hospitals, skilled nursing facilities, physician group practices, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals that trigger an episode of care.

The Center for Medicare and Medicaid Innovation (Innovation Center) developed the BPCI Initiative in order to assess whether the models tested resulted in improved patient care and lower costs to Medicare.

Overview

In Model 1, the episode of care was defined as the inpatient stay in the acute care hospital. Medicare paid the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare continued to pay physicians separately for their services under the Medicare Physician Fee Schedule. The first cohort of Awardees in Model 1 began in April 2013 and concluded on March 31, 2016. The remaining Awardee concluded their participation on December 31, 2016.

Model 2 and Model 3 consisted of a retrospective bundled payment arrangement where actual expenditures were reconciled against a target price for an episode of care. In Model 2, the episode included the inpatient stay in an acute care hospital plus the post-acute care and all related services up to 90 days post-hospital discharge. In Model 3, the episode of care was triggered by an acute care hospital stay but began at initiation of post-acute care services with a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital, or home health agency. Under these retrospective payment models, Medicare continued to make fee-for-service (FFS) payments; CMS later reconciled the total expenditures for the episode against a bundled payment amount (the target price). Medicare then made a payment or recoupment amount that reflected the aggregate expenditures compared to the target price.

In Model 4, CMS made a single, prospectively determined bundled payment to the hospital that encompassed all services furnished by the hospital, physicians, and other practitioners during the episode of care, which lasted the entire inpatient stay. Physicians and other practitioners submitted “no-pay” claims to Medicare and were paid by the hospital out of the bundled payment. The first cohorts of Awardees in Models 2, 3, and 4 began in October 2013. Models 2 and 3 ended September 20, 2018.

BPCI Model 1: Acute Care Hospital Stay Only

In Model 1, the episode of care was defined as an inpatient stay in an acute care hospital. Medicare paid the hospital a discounted amount based on the Inpatient Prospective Payment System payment rates used in the original Medicare program. Medicare paid physicians separately for their services under the Medicare Physician Fee Schedule. Model 1 Awardees participated in BPCI episodes for all MS-Diagnosis-Related Groups (DRG) for eligible beneficiaries.

Applications to participate in Model 1 were due in November 2011. On January 31, 2013, CMS announced the selection of Model 1 Awardees, and participation began in April 2013. In the summer of 2013, CMS allowed organizations to submit new requests to participate in BPCI Model 1, and one new Awardee began participating in January 2014. The first cohort of Awardees in Model 1 began in April 2013 and concluded March 31, 2016. The remaining Awardee concluded their participation on December 31, 2016.

Models 2, 3 and 4 – Two Phased Implementation

The Bundled Payments for Care Improvement initiative included two phases for Models 2, 3, and 4. Phase 1 – the “preparation” period – was the initial period of the initiative during which CMS and participants prepared for implementation and participant assumption of financial risk. Phase 1 participants transitioned to Phase 2 – the “risk-bearing” period – upon execution of an agreement with CMS.

In December 2014, CMS instituted a timeline for transition to BPCI Phase 2. According to the timeline, every episode initiating organization, regardless of whether the Episode Initiator was directly bearing risk (as an Awardee) or was participating under an Awardee Convener, had to transition at least one Clinical Episode to Phase 2 by July 1, 2015, in order to remain in BPCI. For Models 2, 3 and 4, participants were able to choose from 48 clinical episodes. Phase 1 ended on September 30, 2015 and all clinical episodes for all participants to transition into Phase 2. Phase 2 was originally scheduled to end after each participant completed a three year performance period for each Phase 2 clinical episode. However, CMS extended BPCI until September 30, 2018 for Model 2, 3, and 4 Awardees that chose to extend their performance period for up to 2 years for all clinical episodes.

As of July 1, 2018, the BPCI initiative comprised of 1025 participants in Phase 2 – 206 Awardees and 819 Episode Initiators. Participants could be broken down by provider type: 255 acute care hospitals, 485 skilled nursing facilities, 192 physician group practices, 43 home health agencies, 9 inpatient rehabilitation facilities, and 0 Long Term Care Hospitals. Some awardees were not initiating episodes in BPCI, and therefore, were excluded this breakdown of participants.

BPCI Model 2: Acute & Post-Acute Care Episode

Model 2 involved a retrospective bundled payment arrangement where actual expenditures were reconciled against an episode of care’s target price. Under this payment model, Medicare continued to make fee-for-service (FFS) payments to providers and suppliers who furnished services to beneficiaries in Model 2 episodes. The total expenditures for a beneficiary’s episode was later reconciled against a bundled payment amount (the target price) determined by CMS. CMS then issued a payment or a recoupment reflecting the aggregate performance compared to the target price. In Model 2, the episode of care included a Medicare beneficiary’s inpatient stay in the acute care hospital, post-acute care, and all related services during the episode of care – 30, 60, or 90 days after hospital discharge. Awardees selected up to 48 different clinical episodes to test in the model.

As of July 1, 2018, BPCI Model 2 had 432 Participants in Phase 2. The 432 Participants were comprised of 131 Awardees and 301 Episode Initiators. For Model 2, “Episode Initiator” meant an acute care hospital or a physician group practice that triggered an episode of care. The breakdown of participants by provider type is as follows: 253 Acute Care Hospitals and 152 Physician Group Practices. Some Awardees were not initiating episodes in BPCI, and therefore, were not included in the breakdown of participants above.

BPCI Model 3: Post-Acute Care Only

Model 3 involved a retrospective bundled payment arrangement where expenditures were reconciled against a target price for an episode of care. Under this model, Medicare continued to make fee-for-service (FFS) payments to providers and suppliers who furnished services to beneficiaries in Model 3 episodes. The total expenditures for a beneficiary’s episode was later reconciled against a bundled payment amount (the target price) determined by CMS. CMS then made a payment or a recoupment reflecting the aggregate performance compared to the target price. In Model 3, the Episode of Care was triggered by a Medicare beneficiary’s acute care hospital stay and began at post-acute care services initiation with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital, or home health agency. The post-acute care services included in the episode began within 30 days of inpatient discharge and ended 30, 60, or 90 days after the episode initiation. Participants could select up to 48 different clinical condition episodes to test in the model.

As of July 1, 2018, BPCI Model 3 had 591 participants in Phase 2. The 591 participants were comprised of 73 Awardees and 518 Episode Initiators. For Model 3, “Episode Initiator” meant a post-acute care provider or a physician group practice that triggered an episode of care. The breakdown of participants by provider type was as follows: 485 Skilled Nursing Facilities, 43 Home Health Agencies, 9 Inpatient Rehab Facilities, 40 Physician Group Practices, and 0 Long Term Care Hospitals. Some Awardees were not initiating episodes in BPCI, and therefore, were not included in the participant breakdown by provider type. Currently, 591 Participants comprised 577 episode initiating Awardees and Episode Initiators, and an additional 14 non-episode initiating Awardees were involved in BPCI Model 3. Many participants/awardees comprised numerous sites and can be accessed as a (List).

BPCI Model 4: Prospective Acute Care Hospital Stay Only

In Model 4, CMS made a single, prospectively determined bundled payment that encompassed all services furnished by the hospital, physicians, and other practitioners during an episode of care, which lasted the entire inpatient stay. Physicians and other practitioners had the option to submit “no-pay” claims to Medicare and receive payment from the hospital out of the bundled payment. The bundled payment amount included related readmissions for 30 days after hospital discharge. Participants could select up to 48 different clinical condition episodes to test in the model.

As of July 1, 2018, the BPCI Model 4 had 2 participants in Phase 2. The 2 participants were comprised of 2 Awardees and 0 Episode Initiators involved in care redesign. For Model 4, “Episode Initiator” meant an acute care hospital that triggered an episode of care. The breakdown of participants by provider type was as follows: 2 Acute Care Hospitals. Many awardees comprise numerous sites and can be accessed as a (List).

Evaluations

Latest Evaluation Report

Prior Evaluation Reports

Additional Information


 
Last updated on:
04/08/2020