CMS Launches Bundled Payment Initiative to Reduce Healthcare Costs

February 6, 2013 — The Centers for Medicare and Medicaid Services (CMS) announced that more than 500 organizations will begin participating in the Bundled Payments for Care Improvement initiative. Through this new initiative, made possible by the Affordable Care Act, CMS will test how bundling payments for episodes of care can result in more coordinated care for beneficiaries and lower costs for Medicare.

There are 48 episodes of care that participants are able to choose from, including numerous cardiovascular care areas, including interventional cardiology, cardiac surgery, electrophysiology and structural heart repair.

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 healthcare 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.

“The objective of this initiative is to improve the quality of healthcare delivery for Medicare beneficiaries, while reducing program expenditures, by aligning the financial incentives of all providers,” said Acting Administrator Marilyn Tavenner.

The Bundled Payments for Care Improvement initiative includes four models of bundling payments, varying by the types of health care providers involved and the services included in the bundle. Depending on the model type, CMS will bundle payments for services beneficiaries receive during an episode of care, encouraging hospitals, physicians, post-acute facilities, and other providers as applicable to work together to improve health outcomes and lower costs. Organizations of providers participating in the initiative will agree to provide CMS a discount from expected payments for the episode of care, and then the provider partners will work together to reduce readmissions, duplicative care, and complications to lower costs through improvement.

The announcement includes 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.

The announcement also marks the start of Phase 1 of Models 2, 3 and 4. In Phase 1 (January-July 2013), over 100 participants partnering with more than 400 provider organizations, will receive new data from CMS on care patterns and engage in shared learning in how to improve care. Phase 1 participants are generally expected to become participants in Phase 2, in which approved participants opt to take on financial risk for episodes of care starting in July 2013, pending contract finalization and completion of CMS’ standard program integrity reviews.

Cardiovascular Bundled Payment Categories

Among the 48 episodes of care that participants were able to choose from, the following relate specifically to cardiovascular care: