For many health systems, the BPCI Advanced application process is well under way to meet the approaching March 12 deadline. Over the past month, we’ve worked with both administrators and providers to evaluate their potential financial opportunity should they decide to participate.

Our BPCI Advanced analytics tool was swiftly developed to examine historic costs across the 32 episodes of care included in the voluntary bundled model. These insights have helped organizations understand more clearly where they may specifically have a financial opportunity to benefit from this value-based care payment model. In advance of the target pricing being set by CMS, this tool has been an integral factor in the decision-making process for those considering BPCI Advanced.

In addition to a program overview, during our recent webinar we focused on the new guidelines that CMS released earlier in the month related to the target price and how it will be calculated. Our data scientists and analysts at Avant-garde Health combed through the methodology and shared a summary for the webinar participants.

What we learned is that CMS is using a different methodology from the previous BPCI models. They are incorporating more factors so that hospitals who may already be relatively efficient can be rewarded for continuous improvement.

What we know is that when determining the target price for each episode within each episode initiator, CMS begins with a standardized baseline spending across all Acute Care Hospitals during the baseline period of 2013-2016. Then CMS integrates three additional factors:

Internal Efficiency – CMS adjusts your spend relative to hospitals like you that are treating patients like yours.

Patient Mix – CMS adjusts for the patients that you treat within the clinical episode areas accounting for risk. This can include but are not limited to CMS Hierarchical Condition Category (HCC), HCC interactions and HCC severity, recent resource use, and demographics.

Hospital Characteristics – CMS pays attention to the trend in spend amongst hospitals like yours to project forward to the model year. They make adjustments for variables like whether you’re an academic medical center, whether you’re urban or rural, and which census division you’re in, to name a few.

In May, CMS will use these factors to set a target price in each episode for which the organization has applied. Then in August, hospitals and physician groups will decide if they want to participate and enter into a binding agreement with CMS to begin in October 2018.