Bundled Payments for Care Improvement
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Recent Updates:
05/10 - Updated Application Guidance document & Frequently Asked Questions document posted for Models 2-4 applicants.
05/04 - Now accepting applications for Models 2-4. Learn more about how to apply to Models 2-4.
04/27 - The online application will be available the week of April 30, 2012. The applications for Models 2-4 are now due by 5 PM ET, June 28, 2012. Read more about this important application submission information.
Overview
The Bundled Payments for Care Improvement initiative is seeking applications for four broadly defined models of care, three of which would involve a retrospective bundled payment arrangement, with a target price (target payment amount) for a defined episode of care and one of which would be paid prospectively. Read the Fact Sheet (PDF).
Under the Bundled Payments initiative, CMS would link payments for multiple services patients receive during an episode of care. For example, instead of a surgical procedure generating multiple claims from multiple providers, the entire team is compensated with a “bundled” payment that provides incentives to deliver health care services more efficiently while maintaining or improving quality of care. Providers will have flexibility to determine which episodes of care and which services would be bundled together.
Background
Medicare currently makes separate payments to providers for the services they furnish to beneficiaries for a single illness or course of treatment, leading to fragmented care with minimal coordination across providers and health care settings. Payment is based on how much a provider does, not how well the provider does in treating the patient.
Research has shown that bundled payments can align incentives for providers – hospitals, post acute care providers, doctors, and other practitioners– to partner closely across all specialties and settings that a patient may encounter to improve the patient’s experience of care during a hospital stay in an acute care hospital, and during post-discharge recovery.
Initiative Details: 2 Payments Types, 4 Models
The Centers for Medicare & Medicaid Services (CMS) is working in partnership with providers to develop models of bundling payments through the Bundled Payments initiative. The Bundled Payments initiative is seeking applications for four broadly defined models of care.
Retrospective Bundled Payments
In these models, CMS and providers would set a target payment amount for a defined episode of care. Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount. At the end of the episode, the total payments would be compared with the target price. Participating providers may share the gains resulting from the more efficient redesigned care model.
In Model 1, the episode of care would be defined as the inpatient stay in the general acute care hospital. Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System (IPPS). Medicare will pay physicians separately for their services under the Medicare Physician Fee Schedule. Hospitals and physicians will be permitted to share gains arising from better coordination of care.
In Model 2, the episode of care would include the inpatient stay and post-acute care and would end, at the applicant’s option, either a minimum of 30 or 90 days after discharge. In Model 3, the episode of care would begin at initiation of post-acute care with a participating Skilled Nursing Facility (SNF), Inpatient Rehabilitation Facility (IRF), Long-Term Care Hospital (LTCH) or Home Health Agency (HHA) within 30 days of discharge from the inpatient stay and would end no sooner than 30 days after the initiation of the episode. In both Models 2 and 3, the bundle would include physicians’ services, care by the post-acute provider, related readmissions, and other Part B services proposed in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies (DMEPOS); and Part B drugs. The target price will be discounted from an amount based on the applicant’s historical fee-for-service payments for the episode. Payments will be made at the usual fee-for-service payment rates, after which the aggregate Medicare payment for the episode will be reconciled against the target price. Any reduction in expenditures beyond the discount reflected in the target price will be paid to the participants to share among the participating providers.
Prospective Bundled Payments
Under Model 4, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. Physicians and other practitioners would submit “no-pay” claims to Medicare and would be paid by the hospital out of the bundled payment.