CMS opens bundled payment initiative

The Centers for Medicare & Medicaid Services (CMS) plans to test how bundling payments for episodes of care can result in more coordinated care for beneficiaries and lower costs for Medicare, the agency announced on Jan. 31. More than 500 healthcare organizations are expected to participate in the initial stage of the Bundled Payments for Care Improvement initiative, authorized via the Affordable Care Act.

“The objective of this initiative is to improve the quality of healthcare delivery for Medicare beneficiaries, while reducing program expenditures, by aligning the financial incentives of all providers,” said Acting CMS Administrator Marilyn Tavenner in a prepared statement.

The Bundled Payments for Care Improvement initiative includes four models of bundling payments, varying by the types of healthcare providers involved and the services included in the bundle.  Depending on the model type, CMS will bundle payments for services beneficiaries receive during an episode of care, encouraging hospitals, physicians, post-acute facilities and other providers as applicable to work together to improve health outcomes and lower costs.

Organizations of providers participating in the initiative agree to provide CMS a discount from expected payments for the episode of care, and then the provider partners will work together to reduce readmissions, duplicative care and complications to lower costs through improvement.

The Jan. 31 announcement included the selection of 32 awardees in Model 1; those organizations will begin testing bundled payments for acute care hospital stays as early as April 2013.  CMS said it will also announce in coming weeks a second opportunity for providers to participate in Model 1, with an anticipated start date of early 2014. 

CMS also said Phase 1 has begun for Models 2, 3 and 4 of the initiative. In Phase 1 (January-July 2013), more than 100 participants, partnering with over 400 provider organizations, will receive new data from CMS on care patterns and engage in shared learning in how to improve care.

Phase 1 participants are generally expected to become participants in Phase 2, in which approved participants opt to take on financial risk for episodes of care starting in July 2013, pending contract finalization and completion of CMS’ standard program integrity reviews, the agency said.

"It is important that physicians in a variety of practice types have opportunities to participate in bundled payment program pilots, said Jeremy Lazarus, MD, president of the American Medical Association (AMA), in a prepared statement. "The AMA urges CMS to provide opportunities for additional practices, which may not have been ready to apply when the program was first announced, to participate. We encourage CMS to offer additional models as the four existing models all involve an inpatient hospital stay."

Click here to view a list of awardees for Model 1 and participants for Phase 1 of Models 2, 3 and 4.