Bundled Payments for Care Improvement

JHC-May16-iStock_000060084082_LargeMore than 1,500 healthcare providers are involved in Phase 2 of CMS’s Bundled Payments for Care Improvement (BPCI) Initiative, in which providers assume financial risk for episodes of care. CMS defines an episode of care as the set of services provided to treat a clinical condition or procedure, such as a heart bypass surgery or a hip replacement.

The breakdown of participants by provider type is as follows:

  • Acute care hospitals: 409
  • Skilled nursing facilities: 700
  • Physician group practices: 288
  • Home health agencies: 100
  • Inpatient rehabilitation facilities: Nine
  • Long-term-care hospitals: One

Bundling payment for services that patients receive across a single episode of care is one way to encourage doctors, hospitals and other healthcare providers to work together to better coordinate care for patients, both when they are in the hospital and after they are discharged, according to CMS.

BPCI includes four models of bundled payments tied to inpatient hospital admission. The models vary by the types of providers involved and the length of the bundle after the hospitalization. They are:

  • Model 1: The episode of care is defined as the inpatient stay in the acute care hospital. Medicare pays the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare continues to pay physicians separately for their services under the Medicare Physician Fee Schedule.

Models 2 and 3 involve a retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care. Medicare continues to make fee-for-service (FFS) payments; the total expenditures for the episode are later reconciled against a bundled payment amount (the target price) determined by CMS. A payment or recoupment amount is then made by Medicare reflecting the aggregate expenditures compared to the target price.

  • Model 2: The episode includes the inpatient stay in an acute care hospital plus the post-acute care and all related services up to 90 days after hospital discharge.
  • Model 3: The episode of care is triggered by an acute care hospital stay but begins at initiation of post-acute care services with a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency.
  • Model 4: CMS makes a single, prospectively determined bundled payment to the hospital that encompasses all services furnished by the hospital, physicians, and other practitioners during the episode of care, which lasts the entire inpatient stay. Physicians and other practitioners submit “no-pay” claims to Medicare and are paid by the hospital out of the bundled payment.

For more information about CMS’s Bundled Payments for Care Improvement Initiative, including identification of participating providers, go to https://innovation.cms.gov/initiatives/bundled-payments