The Centers for Medicare & Medicaid Services (CMS) has had a history of reviewing existing payment systems and proposing or piloting alternative payment methodologies. This initiative grew with enactment of the Affordable Care Act. In particular, section 3021 of the Affordable Care Act established the CMS Center for Medicare and Medicaid Innovation (CMMI) to test “innovative payment and service delivery models to reduce program expenditures . . . while preserving or enhancing the quality of care” furnished to Medicare and other governmental program beneficiaries. Since its establishment, CMMI has introduced a number of payment methodologies, including the original Bundled Payments for Care Improvement program (the Original BPCI Program), which began in April, 2013. The Original BPCI Program is set to end on September 30, 2018.

On January 9, 2018, the Centers for Medicare & Medicaid Services (CMS) announced its next iteration, Bundled Payments for Care Improvement Advanced (BPCI Advanced), which is scheduled to begin on October 1, 2018. BPCI Advanced is similar to Original BPCI, with some significant differences.

As its name implies, BPCI Advanced involves a bundled payment methodology. Bundled payment methodologies involve combining the payments for physician, hospital, and other healthcare provider services into a single bundled payment amount. This payment amount is calculated based on the expected costs of all items and services furnished to a beneficiary during a clinical episode of care. Healthcare providers participating in a bundled payment program may realize a gain or loss, based on how successfully they manage resources and total costs throughout each episode of care. CMS believes that bundled payment models can motivate healthcare providers to furnish services efficiently, to better coordinate care, and to improve the quality of care provided to patients.

Attorneys advising clients desiring to participate in these methodologies should be aware of the nuances of BPCI Advanced, as they will likely be assisting clients in the BPCI Advanced application process, commenting on and helping to establish gainsharing methodologies among BPCI Advanced participants so that these methodologies fall within certain waivers that are expected to be issued, drafting the agreements among BPCI Advanced participants, and addressing other issues that arise in the context of BPCI Advanced.

The intent of this Client Alert is to provide a relatively detailed description of BPCI Advanced by:

• Providing an overview of BPCI Advanced and a general timeline for applying and participating in BPCI Advanced
• Describing the participant categories of BPCI Advanced and the BPCI Advanced clinical episodes
• Discussing the financial methodologies and quality measures utilized in BPCI Advanced
• Summarizing the BPCI Advanced waivers
• Comparing BPCI Advanced to Original BPCI and other CMMI programs