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Sep 01

CMS bundled payment initiative – should physicians be on guard?

The Bundled Payments for Care Improvement initiative seeks to improve patient care through payment innovation that fosters improved coordination and quality through a patient-centered approach.  The CMS Innovation Center is seeking applications for four broadly defined models of care.  Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively.  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. 

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 traditional fee-for-service (FFS) system.  After the conclusion of the episode, the total payments would be compared with the target price.  Participating providers may then be able to share in those savings.

Applicants for these models would also decide whether to define the episode of care as the acute care hospital stay only (Model 1), the acute care hospital stay plus post-acute care associated with the stay (Model 2), or just the post-acute care, beginning with the initiation of post-acute care services after discharge from an acute inpatient stay (Model 3).  Under the fourth model, CMS would make a single, prospective bundled payment that would encompass all services furnished during an inpatient stay by the hospital, physicians and other practitioners. 

Interested organizations must submit a nonbinding letter of intent by September 22, 2011 for Model 1 and November 4, 2011 for Models 2-4 as described in the Bundled Payments for Care Improvement initiative RFA.  For applicants wishing to receive historical Medicare claims data in preparation for Models 2-4, a separate research request packet and data use agreement must be filed in conjunction with the Letter of Intent.  Final applications must be received on or before October 21, 2011 for Model 1 and March 15, 2012 for Models 2-4. 

For more information, click on links below: 

  • For a General Fact Sheet on the Bundled Payments for Care Improvement initiative, click here
  • For Bundled Payments for Care Improvement initiative Frequently Asked Questions, click here
  • For the Bundled Payments for Care Improvement initiative Request for Application, click here
  • For Bundled Payments for Care Improvement initiative application information and materials, click here
About Reed Tinsley, CPA

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