The Centers for Medicare and Medicaid Services' (CMS) bundled payments for care improvement initiative, made possible by the Affordable Care Act, will test how bundling payments for episodes of care can result in lower costs for Medicare and more coordinated care for beneficiaries. More than 500 organizations will begin participating in the new initiative, with testing reportedly to begin in April.
The bundled payment initiative includes 4 models of bundling payments that vary by the type of healthcare provider involved and the services included in the bundle. CMS will bundle payments for services that beneficiaries receive during an episode of care, depending on the model type, which is intended to encourage hospitals, physicians, and other providers (as applicable) to work together to improve health outcomes and lower costs.
The organizations of providers participating in the initiative will agree to provide CMS a discount from expected payments for the episode of care, and provider partners will then work together to reduce duplicative care, readmissions, and complications to lower costs through improvement.
This recent announcement from CMS also marks the start of phase 1 of models 2, 3, and 4, and more than 100 participants partnering with over 400 provider organizations will engage in shared learning in how to improve care and receive new data from CMS on care patterns in phase 1 (January to July 2013). Participants in phase 1 are generally expected to participate in phase 2.
In phase 2, approved participants elect to take on financial risks for episodes of care starting in July of this year pending certain conditions, such as contract finalization.