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CMS announces groups for bundled payments program


The Centers for Medicare & Medicaid Services has announced that more than 500 organizations will begin participating in the Bundled Payments for Care Improvement initiative, an Affordable Care Act program to test whether bundling payments for episodes of care results in more coordinated care for beneficiaries and lower costs for Medicare.

Traditionally, according to a CMS fact sheet, “Medicare makes separate payments to providers for each of the individual services they furnish to beneficiaries for a single illness or course of treatment. This approach can result in fragmented care with minimal coordination across providers and healthcare settings. Payment rewards the quantity of services offered by providers rather than the quality of care furnished.

“Research has shown that bundled payments can align incentives for providers — hospitals, post-acute care providers, physicians and other practitioners — allowing them to work closely together across all specialties and settings.”

CMS will bundle payments for services beneficiaries receive during an episode of care, encouraging hospitals, physicians, post-acute care facilities and other providers as applicable to work together to improve health outcomes and lower costs. The provider partners will work together to reduce readmissions, duplicative care and complications to lower costs through improvement.

For three of the four models in the initiative, CMS will set a target price for the episode of care. Organizations that come in under the target will receive additional payments, while those that exceed the target must pay the difference back to CMS. For the fourth model, CMS will provide 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.

The announcement includes the selection of 32 awardees in Model 1 (acute-care hospital stay) that will begin testing bundled payments as soon as April. In the coming weeks, CMS also will announce a second opportunity for providers to participate in Model 1, with an anticipated start date of early 2014.

The announcement also marks the start of Phase 1 of Models 2 (acute-care hospital stay plus post-acute care), 3 (post-acute care only) and 4 (acute-care hospitals stay with prospective payments).

In Phase 1 (January-July) for those three models, more than 100 participants partnering with more than 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 generally are expected to become participants in Phase 2, in which approved participants opt to take on financial risk for episodes of care starting in July, pending contract finalization and completion of standard program integrity reviews by CMS.

Plans for all models “include care redesign and enhancements, such as reengineered care pathways using evidence-based medicine, standardized operating protocols, improved care transitions and care coordination,” according to the CMS fact sheet.

For Models 2 through 4, CMS has designated 48 episodes of care such as amputation, urinary tract infection, stroke and coronary artery bypass graft surgery. Bundled payments will encompass one or more episodes for each participating organization. Bundled payments in Model 1 encompass all Medicare diagnosis-related groups.

For a complete list of participants and the episodes of care they will be testing, visit


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