Overview
CMS is partnering with selected providers to develop models of
bundling payments through the Bundled Payments initiative. On
August 23, 2011, CMS invited providers to apply to help test and
develop four different models of bundling payments. CMS states
the Bundled Payments initiative will allow providers flexibility
in selecting conditions to bundle, developing the health care
delivery structure, and determining how payments will be
allocated among participating providers.
Three of the four models involve retrospective bundled payment
arrangements with a target price for a defined episode of care,
the fourth is a prospective model:
Model 1 defines the episode of care as the inpatient stay in
an acute care hospital.
Model 2 addresses an inpatient stay and post-acute care
ending either a minimum of 30 days or 90 days after
discharge (at the applicant's option).
Model 3 defines the episode of care as beginning at
discharge and ending no sooner than 30 days after discharge.
Model 4 involves a single prospective payment to encompass
all services furnished during an inpatient stay by a
hospital, physicians and other health care practitioner
Applicants and Timeline
Eligible awardee applicants for any of the models can include:
Physician group practices; Acute care hospitals paid under the
IPPS; Health systems; Physician-hospital organizations; and
Conveners of participating health care providers. In addition,
applicable post-acture providers can participate in models 2 and
3. Providers may apply to participate in more than one model.
CMS will give preference to applicants who are meaningful users
of HIT or who have a minimum of 50% of their providers meeting
the standards for meaningful use. For Models 2 and 3, CMS will
give preference to applicants proposing an episode definition
longer than 30 days. CMS will look favorably on applications
that indicate a higher historical rate of physician
participation in the Physician Quality Reporting System. CMS
will also view favorably applications that include governing
bodies with meaningful representation from consumer advocates,
patients, and all participating provider types/organizations,
and applications that include functional status in the proposed
quality measures.
The timeline for providers to apply to participate varies by the
model. For Model 1, a nonbinding Letter of Intent
was due on September 22, 2011 and the Application is due on
October 21, 2011. For Models 2-4, the nonbinding LOI is due on
November 4, 2011 and the Application is due on March 15, 2012.
CMS is making historical Medicare claims data available to
applicants for Models 2-4. Applicants that wish to receive such
claims data must complete a Research Request Packet by November
4, 2011. Applicants for Models 2-4 also must execute a Data Use
Agreement limiting the applicants' use of CMS provided data.
That Agreement is also due November 4, 2011.
Bundled Payments Defined
CMS provides this general definition of Bundled Payments:
"rather than paying separately for each item or service, a
single payment is made for a defined group of services. The
bundled payment may cover services furnished by a single entity
(hospital or other provider) or it may be used to pay for items
and services furnished by several providers in multiple care
delivery settings. The bundled payment may cover services
furnished by a single entity (hospital or other provider). In
this context, bundled payment refers to a single negotiated
episode payment of a predetermined amount for all services
(physician, hospital, and other provider services) furnished
during an episode of care. This could be paid prospectively or
retrospectively."
Retrospective Payment Bundling
Models 1-3 involve retrospective payment bundling, in which 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 then be able to share in those savings.
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, while in Model 3, the episode of care
would begin at discharge from the inpatient stay and would end
no sooner than 30 days after discharge. In both Models 2 and 3,
the bundle would include physicians' services, care by a
post-acute provider, related readmissions, and other 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 Payment Bundling
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.
Gainsharing Arrangements
In addition to streamlining care through the use of bundles, the
proposals for this initiative may include gainsharing
arrangements. Gainsharing refers to payments that may be made by
hospitals and other providers to physicians and other
practitioners as a result of collaborative efforts to improve
quality and efficiency. These payments can further align
incentives for health care providers to coordinate care, improve
quality and efficiency of care, and partner in the improvement
of care delivery.
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