CMS Introduces Bundled Payment Initiative

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The Centers for Medicare and Medicaid Services (CMS) on Tuesday announced a new plan offering bundled payments to physicians, hospitals, and other health care providers.

As set forth in the Affordable Care Act, bundled payments comprise remuneration for a given patient’s entire episode of care, rather than for individual components of care. For example, instead of paying multiple claims from different healthcare providers for a stroke, Medicare would issue a single payment to the entire team who treated the patient once his or her care was completed. The providers would, in turn, determine how to allocate the monies among the hospital, participating physicians, and any other entities involved.

Under the Bundled Payments for Care Improvement Initiative, as the plan is known, providers can apply to participate in one of four models, each of which combines different services to be paid for in bundled fashion. Model 1 encompasses hospital services provided to a beneficiary during an acute inpatient stay, where physicians work together to improve care; Model 2: hospital, physician, post-acute provider, and other Medicare-covered services provided during the inpatient stay and during recovery after discharge to the home or another care setting.

Meanwhile, Model 3 includes hospital, physician, post-acute provider, and other Medicare-covered services beginning with the initiation of post-acute care services after discharge from an acute inpatient stay. Model 4 includes inpatient hospital and physician services and related re-admissions in which a prospective payment would be sent to the hospital, which would decide how to distribute it among providers.

Health and Human Services Secretary Kathleen Sebelius says the new, voluntary payment approach is intended to encourage health care providers to collaborate to improve the health of patients. It creates a foundation for a migration away from Medicare's fee-for-service system.

Groups interested in receiving bundled payments would apply to CMS and bid on a target price for a given medical service. A discounted rate would initially be paid to participants in the models under the traditional Medicare fee-for-service system. However, following an episode’s conclusion (for example, a heart attack, followed by cardiac imaging procedures, surgery, etc.) total payments would be compared to the target price, with group sharing in Medicare's savings.

Groups wishing to receive bundled payments under Model 1 should submit a letter of intent to CMS by September 22.

For more information, including a program application, click here: http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundle...