BPCI Tutorial Video 5: Risk Tacks – A Story of Averages and Outliers
We’re all too familiar with outlier risk in healthcare – the outlier payment alleviates this burden in the FFS world, but ultimately ends up increasing average spend per case in the clinical episode in the BPCI program. Net effect: a negative NPRA on said clinical episode.
CMS has allowed BPCI participants to choose from three risk tracks to manage their outlier risk. The choice of risk track applies to baseline period as well as to the performance periods subsequent to program participation. Risk track A allows participants to minimize (but not eliminate, since BPCI requires 20% of the cost above 99th percentile to be added to the spend numbers) the risk of the top 1% of their patients in a clinical episode in exchange for giving up 1% of their lowest cost patients. Risk track B does the same, but with the top and bottom 5% of patient cases by spend. Risk track C minimizes the risk associated with top 25% of the cases by giving up 5% of the least expensive cases.
Risk track A: is best chosen in scenarios where your episode costs are fairly well distributed, care redesign is the path to improving patient care and reducing costs. By capturing the maximum number of cases, you keep the target price high, providing ample room for improvement.
Risk track B: If you notice that the top 5% of your claims are fairly similar to each other, choosing risk track B will remove the bottom 5% of your claims, producing a higher target price than choosing risk track A would.
Risk track C: is appropriate in situations where participants anticipate that most of the savings will be achieved through internal cost savings – risk track C keeps target prices low, hence the CMS mandatory discount also low.