CMS Trials Bundled Payments for Episodes of Care

Cheryl Clark, for HealthLeaders Media , August 24, 2011

Letters of intent for Model 1 are due by Sept. 22, and the program is expected to begin on Jan. 1.

 Model 2 *
The episode of care would include inpatient stay and post-acute care and would end either 30 or 90 days after discharge.

Model 3 *
The episode of care would begin at discharge and would end no sooner than 30 days after discharge.

* Both Models 2 and 3

The bundle would include physicians services, care by a post-acute provider, related readmissions, and other services defined such as lab services, durable medical equipment, prosthetics, orthotics and supplies 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. Reductions in expenditures beyond the discount reflected in the target price will be paid to participants to share among participating providers.

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.

Letters of intent for models 2-4 are due Nov. 4. These programs would begin in late spring, 2012.

Administration officials described the bundled payment program as one that will unite hospitals and physicians in a common goal they do not now have because payment is based on volume and service provided, not on coordinated care.

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