Under the Bundled Payments for Care Improvement initiative, organizations will enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality, more coordinated care at a lower cost to Medicare.
Under Model 1, the episode of care is defined as 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 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.
Background
Traditionally, 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 health care 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.
On January 31, 2013, CMS announced the selection of 32 awardees in Model 1, who will begin testing bundled payments for acute care hospital stays as early as April 2013. In the coming weeks, CMS will also announce a second opportunity for providers to participate in Model 1, with an anticipated start date of early 2014.
Model 1 participants
- Dignity Health (California) This participant is a convener of 2 health care facilities in CA
- Greater New York Hospital Association (New York) This participant is representing 1 health care facility
- New Jersey Hospital Association (New Jersey) This participant is a convener of 29 health care facilities in NJ
Additional Information
