Summary: The ACA promotes quality of care as well as coordination of care. We will discuss 6 CMS bundled payments initiatives/demonstrations CMS is piloting to achieve these goals.
The Affordable Care Act (ACA) law establishes a national pilot program to redesign Medicare payments on a per episode basis rather than on a per service basis. This type of payment system is referred to as “bundling”. Bundling is a team oriented approach which promotes and rewards based upon delivering services more efficiently while still promoting quality of care. Savings are shared between providers and the Medicare program. For example, a surgical procedure would be one claim rather than one for the physician, one for the anesthesiologist, and one for the hospital. The bundling of services should provide a more efficient claims system which would pay claims in a more expedient manner.
The Need for Bundled Payments
The ACA has one of its initiatives to improve quality of care. Up until now, Medicare payments have been provided based upon quantity as opposed to quality and has been paid on a per provider basis rather than a per service basis. The ACA also is focused upon coordination of care. Coordination of care can result in lower healthcare costs and better patient outcomes. Providers working together can provide better and more comprehensive care than working in silos. The ACA has charged CMS with creating payment plans to reward those who can effectively coordinate care and provide higher quality care. As such, CMS has 6 Bundled Payments for Care Improvement (BPCI) initiatives which are currently being piloted:
- BPCI Model 1: Retrospective Acute Care Hospital Stay Only
- BPCI Model 2: Retrospective Acute and Post-Acute Care Episode
- BPCI Model 3: Retrospective Post-Acute Care Only
- BPCI Model 4: Prospective Acute Care Hospital Stay Only
- Medicare Acute Care Episode (ACE) Demonstration
- Physician Hospital Collaboration Demonstration
BPCI Model 1: Retrospective Acute Care Hospital Stay Only
- Episode of care – the inpatient stay in the acute care hospital
- Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System (PPS) used in the original Medicare program.
- Medicare will continue to pay physicians separately for their services under the Medicare Physician Fee Schedule.
- Under certain circumstances, hospitals and physicians will be permitted to share gains arising from the providers’ care redesign efforts.
- Participation will begin as early as April, 2013 and no later than January, 2014 and will include most Medicare fee-for-service discharges for the participating hospitals.
- Participants: 1
BPCI Model 2: Retrospective Acute & Post Acute Care Episode
- Episode of care will include the inpatient stay in the acute care hospital and all related services during the episode. The episode will end either 30, 60, or 90 days after hospital discharge.
- Participants can select up to 48 different clinical condition episodes.
- The bundle will include physicians’ services, care by post-acute providers, related readmissions, and other related Medicare Part B services included in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies; and Part B drugs.
- A target price will be set that will be based on historical fee-for-service payments for the participant’s Medicare beneficiaries in the episode and will include a discount.
- 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 participant and may be shared among their provider partners.
- Participants: 48
BPCI Model 3: Retrospective Post Acute Care Only
- Episode of care will be triggered by an acute care hospital stay and will begin at initiation of post-acute care services with a participating
skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. - The post-acute care services included in the episode must begin within 30 days of discharge from the inpatient stay and will end either a minimum of 30, 60, or 90 days after the initiation of the episode.
- Participants can select up to 48 different clinical condition episodes.
- The bundle will include physicians’ services, care by post-acute providers, related readmissions, and other related Medicare Part B services included in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies; and Part B drugs.
- A target price will be set that will be based on historical fee-for-service payments for the participant’s Medicare beneficiaries in the episode and will include a discount.
- 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 participant and may be shared among their provider partners.
- Participants: 17
BPCI Model 4: Prospective Acute Care Hospital Stay Only
- CMS will 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 will submit “no-pay” claims to Medicare and will be paid by the hospital out of the bundled payment.
- Related readmissions for 30 days after hospital discharge will be included in the bundled payment amount.
- Participants can select up to 48 different clinical condition episodes.
- Participants: 33
Medicare Acute Care Episode (ACE) Demonstration
- The 3-year ACE demonstration will test the use of a global payment for an episode of care as an alternative approach to payment for service delivery.
- The global payment will cover all Part A and Part B services, including physician services, pertaining to the inpatient stay for Medicare fee-for-service beneficiaries
- The goal of the Acute Care Episode (ACE) demonstration is to use a bundled payment to better align the incentives for both hospitals and physicians, leading to better quality and greater efficiency in the care that is delivered.
- The demonstration will also test the effect that transparent price and quality information has on beneficiary choice for select inpatient care.
- There are 28 cardiac and 9 orthopedic inpatient surgical services and procedures included in the bundled payment demonstration. These elective procedures were selected because volume has historically been high; there is sufficient marketplace competition to ensure interested demonstration applicants; the services are easy to specify, and quality metrics are available for them.
Physician Hospital Collaboration Demonstration
- This demonstration will examine the effects of gainsharing aimed at improving the quality of care in a health delivery system. More specifically, the demonstration will determine if gainsharing is an effective means of aligning financial incentives to enhance quality and efficiency of care across an entire system of care.
- This demonstration will examine approaches that involve long-term follow-up to assure both documented improvements in quality and reductions in the overall costs of care beyond the acute inpatient stay.
- CMS is particularly interested in demonstration designs that track patients well beyond a hospital episode, to determine the impact of hospital-physician collaborations on preventing short and longer-term complications, duplication of services, coordination of care across settings, and other quality improvements that hold great promise for eliminating preventable complications and unnecessary costs.
These demonstrations are indicative of the efforts and concentration CMS is embarking upon in order to make the ACA a success. These initiatives are designed to promote coordination, collaboration, and quality of care. CMS bundled payments are the most popular discussion second to the recent changes and challenges to the ACA.
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