Bundled Payments Have Arrived

Providers should take notice the Single Payment for multiple providers has arrived! The Centers for Medicare and Medicaid Innovation (”CMI”) created by the Patient Protection and Affordable Care Act (”Healthcare Reform Act”) tests innovative healthcare payment models with a focus to reduce healthcare cost of while enhancing the quality of care delivered. As part of its charge, CMI engages in demonstration projects and creates models throughout the United States that changes how providers are paid for care. CMI is driving care coordination between different providers, in different types of service settings through innovative payment changes that cause the provider to change their behavior.

On Tuesday, August 23, 2011, CMI announced its new Bundled Payment for Care Improvement Program (”Program”). This Program is intended to improve patient care by driving innovative and coordinated efforts between providers by changing the payment delivery. There are four potential models that providers can voluntarily participate in under this Program. Two of the models focus upon inpatient hospital services only while the other two encompass post acute care settings such as rehabilitation centers. All of the models also require reporting on quality measures to measure the quality of the services rendered.

Currently, when an insured patient sees a healthcare provider, the insurance company or Medicare or Medicaid will receive different claims from the hospital, the treating physician, the consulting physician(s), and other service providers who touch or render care to the patient during the patient’s hospital stay. Thus, the insurance payers will receive multiple claims with different charges from different providers and should pay a fee to each provider. This Program is intended to coordinate the healthcare providers who provide a specific treatment plan for a patient in specific settings into one single bundled payment that would encompass all the services provided during the episode of care, by all providers, including the hospital. Accordingly, instead of receiving multiple claims for payment to be paid to multiple entities, there would be one lump sum consolidated payment to pay all service providers to be divided among the providers.

The Program focuses on four main models. Two of the models focus upon inpatient stays only. The models would apply to the physician group practices, the acute care hospitals, health systems, physician hospital organizations and conveners of participating healthcare providers. The payment is a discount from the payments that the hospitals currently receive for the diagnosis related group (DRG). CMS believes they would receive a discount of at least 2% of their current payments by the third year of this Program. In one model the physicians will continue to submit their claims and the bundled payment portion will be issued to the physician. The other inpatient model provides a prospective payment. Under this model, the physicians would submit “no-pay” claims to Medicare or Medicaid and the hospital would receive the one payment for the hospital and it would pay the physicians.

Two other models focus on post discharge services and applies to providers, including long term acute care, skilled nursing facilities, inpatient rehabilitation facilities, skilled nursing facilities and home health agencies. One post discharge care model payment is set for an episode of care that includes the inpatient stay and either thirty or ninety days post discharge services. The other post discharge model does not include inpatient stay. The payment amount is set as a target price and the providers would bill for their services which would be reconciled with the set target price. If the actual fees are less than the target price, the excess savings will be shared among all of the providers involved in the episode of care. Again, there would be a discount off of the fees from the current Medicare and Medicaid reimbursement and the payments to the individual providers are based upon their normal fee schedules with reconciliation to the target price.

Payment reform programs have been infiltrating the hospitals and healthcare systems as well as the physician offices for quite some time. This Program is a concept that would dramatically change how providers behave, interact. It will drive changes in the care coordination and payment delivery systems between providers who previously operated separately and now must collaborate based upon their financial integration driven through the bundled payment. Even though the CMI program is currently a voluntary program, if it is successful, bundled payments will become the norm. In preparation of the future, if providers seek to participate in any of these voluntary payment programs, the letter of intent must be submitted to CMI this Fall.

One comment Add your comment


August 23rd, 2012
11:20 am

it’s really not thuogh. I suffer from arthritis, and going to a conventional doctor i was given Naproxen, at the age of 14. I started developing stomach ulcers from the Naproxen. My doctor gave me the option to have stomach ulcers or suffer through arthritis. My naturopath has worked with me for 4years now. And my arthritis has gotten incredibly better. I no longer am bed ridden for days on end when there are barometric pressure changes.