Providers: Apply for Bundled Payments Initiative

Due to a large number of inquiries about the Bundled Payments for Care Improvement initiative, and many requests for additional time to prepare applications, the Centers for Medicare & Medicaid Services (CMS) has, for the second time, extended the deadlines for submitting letters of intent and applications.

The initiative seeks proposals from health care providers who wish to align incentives between hospitals, physicians, and non-physician practitioners (NPPs) to better coordinate care. These providers will test four different models of episode-based payment for acute care and associated post-acute care, using both retrospective and prospective bundled payment methods.

In Model 1, the episode of care would be defined as the inpatient stay in the general acute care hospital. Hospitals would be paid a discounted amount based on the Inpatient Prospective Payment System (IPPS), and physicians would be paid under the Medicare Physician Fee Schedule (MPFS).

The extended Oct. 6 deadline for submitting non-binding letters of intent to participate in Model 1 has already come and gone. But organizations still have time to submit applications. The Model 1 application deadline is now Nov. 18.

In Model 2, the episode of care would include the inpatient stay and post-acute care, which would end, at the applicant’s choosing, 30 or 90 days after discharge. While in Model 3, the episode of care would begin at discharge from the inpatient stay and would end no sooner than 30 days after discharge.

In both Models 2 and 3, the bundle would include physicians’ services, care by a post-acute provider, related readmissions, and other services proposed in the episode definition. Medicare payment for the episode would be reconciled against the target price, which would be a discounted rate based on the applicant’s historical fee-for-serve payments for the episode. Any cost savings beyond the discount would be paid to the participants to share among the participating providers.

In Model 4, hospitals would receive a single, IPPS-determined bundled payment 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.

For Models 2-4, letters of intent are now due Nov. 4, and final applications must be received by March 15, 2012.

See the CMS Innovation Center website for more information about this initiative and how to participate.


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