CMMI Launches Another Reform Pilot Opportunity—Bundled Payments for Care Improvement

Blog posted by Nicole Fallon

A co-worker of mine was delivering a presentation earlier this week and as he started to talk about how health reform would dramatically shift the aging services field, the floor underneath him and the projector began to shift. No, he doesn’t use telekinetic powers to make his points; he was presenting in Virginia when the earthquake hit.

Interestingly, it is also the same day (August 23, 2011) the Center for Medicare and Medicaid Innovation (CMMI) announced its latest foray into payment reform: the Bundled Payments for Care Improvement Initiative. (Visit CMS to request an application or learn more.)

While it is too early to tell if bundled payments will result in seismic shifts in the way providers are paid in the future, it's certainly one of the steps away from fee-for-service (FFS)—and towards more risk (and possibly reward) for providers.

Bundled models available for both inpatient and post-acute providers

With an eye to redesigning care and reducing costs, CMMI’s new initiative offers four bundled payment models which providers (or groups of providers) can apply to participate. Models one and four will test the bundled payment concept for the acute inpatient hospital stay of an episode of care. Models two and three give post-acute providers opportunities to participate in a bundled payment arrangement.

The four models

In model one, an episode is considered an acute inpatient hospital stay for all Medicare FFS beneficiaries regardless of assigned health condition (MS-DRG). In contrast, model four provides a prospective payment for an acute inpatient hospital stay for select conditions (MS-DRGs). Model two covers episodes that include both the inpatient hospital stay and the corresponding post-acute care services. Model three would provide a bundled payment for all post-acute care services (a minimum of 30 days) following an acute inpatient hospitalization and the related Part A and B services furnished during the post-acute period.

Applying providers are expected to propose the bundled payment amount (or discounted amount off current Medicare payment), the episodes of care (MS-DRGs) for which they will accept a bundled payment, the length of the episode, and the quality measures that will be tracked and reported.

The key deadlines

If you’re interested in testing the bundled payment concept, don’t delay. Letters of intent for model one are due by September 22, 2011, with applications to follow by October 21. All other models require a letter of intent by November 4, 2011, and applications by March 15, 2012. For the latter, CMS is willing to share claims data with applicants to help them calculate their proposed target price or bundled payment for the episodes of care.

CMMI has indicated this is only the beginning of bundled payment initiatives they will be rolling out.

More bundled payment initiatives ahead

For those of you not sure if this is the health reform pilot program you want to dip your toe into, there are more opportunities to come. CMMI has indicated this is only the beginning of bundled payment initiatives they will be rolling out. Others may include: more prospective payments for both acute care and chronic care, developing a plan for a chronic care bundled payment, and exploring gainsharing models. In addition, the health reform law (PPACA) contains several initiatives around bundled payments including integrated care around a hospitalization for Medicaid episodes, a global payment option for safety net hospitals, and a national bundled payment pilot program that we are still awaiting details on. What was proposed by CMMI on August 23 is in addition to and in advance of information on these other programs.

We, at LarsonAllen, are currently reviewing the request for application to determine where the opportunities are for various providers. We will discuss these in a future blog post.