Bundled Payments For Care Improvement Initiative - Make Your Revenue Smarter

From the CMS Fact Sheet:

CMS is working in partnership with 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. Through the Bundled Payments initiative, providers have great flexibility in selecting conditions to bundle, developing the health care delivery structure, and determining how payments will be allocated among participating providers.

The Bundled Payments 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.

Retrospective Payment Bundling

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 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.

A side-by-side comparison of key features of the four models can be found below.

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.

Additional Information about Applying for the Bundle Payments for Care Improvement initiative: Organizations are welcome and encouraged to apply for and participate in one or more models. Providers participating in Accountable Care Organizations wishing to use this opportunity to improve care coordination and the quality of care are welcome to do so. For more information on applicant eligibility, please review the “Conditions of Participation” section of the RFA.

Applicants will be required to identify the clinical condition(s) through MS-DRGs, define the time period for the episode of care, and identify the services included in the bundled payment, among other criteria. Applicants will also be required to plan and implement quality assurance and improvement activities as a condition of participation in this initiative and participate in CMS quality monitoring by reporting appropriate quality measures. During the demonstration, CMS will carefully monitor the program to ensure improved clinical quality, patient experience, and outcomes of care throughout participation in the initiative. Applicants will be required to propose strong patient protections that preserve beneficiary choice in seeking care from the provider of their choice.

To help facilitate health care innovation, recognize the diversity of provider organizations, and cultivate strong provider partnerships, applicants are asked to submit their own episode definitions and bundled payment proposals. CMS will provide historical Medicare claims data to potential applicants planning to apply for Models 2-4. The data are intended to enable potential applicants to develop well-defined episodes and discount proposals based on the experience of providers in the applicant’s area. In order to be considered for receipt of data, applicants must submit a Research Study Protocol along with their letter of intent (LOI) and will later be expected to submit and comply with a Data Use Agreement (DUA). Both of these forms are available on the Bundled Payments for Care Improvement website.

Deadlines for Letters of Intent and Applications: Applicants for Model 1 must submit a nonbinding LOI by September 22, 2011 and a completed application by October 21, 2011. Applicants for Models 2-4, must submit a nonbinding LOI by November 4, 2011; applicants who wish to receive historical Medicare claims data must complete a Research Request Packet by November 4, 2011 as well. If approved to receive Medicare data, applicants must submit a DUA prior to receipt of data. Completed applications for Models 2-4 must be submitted by no later than by March 15, 2012.

For more information please refer to the RFA and application found at: www.innovations.cms.govor email at BundledPayments@cms.hhs.gov.

 

BUNDLED PAYMENTS FOR CARE IMPROVEMENT INITIATIVE

KEY FEATURES OF BUNDLED PAYMENT MODELS COMPARED

 


MODEL

FEATURE

MODEL 1 –

Inpatient Stay Only

MODEL 2 –

Inpatient Stay plus Post-discharge Services

MODEL 3 ?

Post-discharge Services Only

MODEL 4 –

Inpatient Stay Only

Eligible Awardees

· Physician group practices

· Acute care hospitals paid under the IPPS

· Health systems

· Physician-hospital organizations

· Conveners of participating health care providers

· Physician group practices

· Acute care hospitals paid under the IPPS

· Health systems

· Physician-hospital organizations

· Post-acute providers

· Conveners of participating health care providers

· Physician group practices

· Acute care hospitals paid under the IPPS

· Health systems

· Long-term care hospitals

· Inpatient rehabilitation facilities

· Skilled nursing facilities

· Home health agency

· Physician-hospital organizations

· Conveners of participating health care providers

· Physician group practices

· Acute care hospitals paid under the IPPS

· Health systems

· Physician-hospital organizations

· Conveners of participating health care providers

 

Payment of Bundle and Target Price

Discounted IPPS payment; no separate target price

Retrospective comparison of target price and actual FFS payments

Retrospective comparison of target price and actual FFS payments

Prospectively set payment

Clinical Conditions Targeted

All MS-DRGs

Applicants to propose based on MS-DRG for inpatient hospital stay

Applicants to propose based on MS-DRG for inpatient hospital stay

Applicants to propose based on MS-DRG for inpatient hospital stay

Types of Services Included in Bundle

Inpatient hospital services

· Inpatient hospital and physician services

· Related post-acute care services

· Related readmissions

· Other services defined in the bundle

· Post-acute care services

· Related readmissions

· Other services defined in the bundle

· Inpatient hospital and physician services

· Related readmissions

Expected Discount Provided to Medicare

To be proposed by applicant; CMS requires minimum discounts increasing from 0% in first 6 mos. to 2% in Year 3

To be proposed by applicant; CMS requires minimum discount of 3% for 30-89 days post-discharge episode; 2% for 90 days or longer episode

To be proposed by applicant

To be proposed by applicant; subject to minimum discount of 3%; larger discount for MS-DRGs in ACE Demonstration

Payment from CMS to Providers

· Acute care hospital: IPPS payment less pre-determined discount

· Physician: Traditional fee schedule payment (not included in episode or subject to discount)

Traditional fee-for-service payment to all providers and suppliers, subject to reconciliation with predetermined target price

Traditional fee-for-service payment to all providers and suppliers, subject to reconciliation with predetermined target price

Prospectively established bundled payment to admitting hospital; hospitals distribute payments from bundled payment

Quality Measures

All Hospital IQR measures and additional measures to be proposed by applicants

To be proposed by applicants, but CMS will ultimately establish a standardized set of measures that will be aligned to the greatest extent possible with measures in other CMS programs

 

View the complete Fact Sheet here

 

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