Bundles begin

CMS announces bundled payment program

Topics: Health Policy, Market Trends, Strategy, Medicare, Reimbursement, Finance

August 23, 2011

CMS on Tuesday announced its new Bundled Payments for Care Improvement initiative, which was created by the Affordable Care Act as a way to better align provider payments across an episode of care.

What will the program mean for providers? Click here  to read initial takeaways from Chief Research Officer Chas Roades.

Under the program, the CMS Innovation Center is inviting providers to apply for four broadly defined models of care; three models involve retrospective bundled payments and the fourth would reimburse providers using prospective payment. Applicants would propose the target price and have "great flexibility" in selecting which conditions to bundle, setting up the delivery structure, and determining how to allocate payments among participating providers, the agency notes.

In a conference call, CMS officials said that they expect "hundreds of providers" to join the program, Modern Healthcare reports. Participants would choose to define their model of care based on one of the following four models:

  • Model 1: Only the acute care hospital stay.
  • Model 2: The acute care hospital stay plus associated post-acute care.
  • Model 3: Only the post-acute care services.
  • Model 4: CMS would make a single prospective payment that encompasses all services delivered during an inpatient stay.

Providers interested in Model 1 must submit a letter of intent to CMS by September 22, 2011; the other three models have a deadline of November 4, 2011.

"Hospitals and other providers recognize that they have to accommodate the current (fiscal) environment," according to Nancy Foster, the American Hospital Association's vice president for quality. She says some providers ultimately may receive less money through bundled payments; however, she notes that they may qualify for care coordination rewards and costs will still be covered (CMS release, 8/23; CMS website, accessed 8/23; Daly, Modern Healthcare, 8/23 [subscription required]; Selyukh/Yukhananov, Reuters, 8/23).

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