Bundled Payments for Care Improvement Initiative

The Centers for Medicare and Medicaid Services is testing how to pay providers for episodes of care instead of for individual services.

The Bundled Pay­ments for Care Improvement (BPCI) initiative tests four different models based on episodes of care that involve an inpatient hospital stay.

What’s the Issue?

The Affordable Care Act (ACA) gave the Cen­ters for Medicare and Medicaid Services (CMS) broad authority to test out new pay­ment models that have the potential to reduce Medicare spending, as long as those models preserve or enhance the quality of care provid­ed to beneficiaries. Sylvia Mathews Burwell, secretary for health and human services, has committed to tying 50 percent of Medicare payments to these new alternative payment models by the end of 2018.

The Center for Medicare and Medicaid In­novation (CMMI) within CMS is testing a variety of new approaches, including pay­ing providers for episodes of care instead of for each service provided. The Bundled Pay­ments for Care Improvement (BPCI) initiative tests four different models based on episodes of care that involve an inpatient hospital stay. One model focuses on care provided during the hospital stay, while the other three mod­els include postacute care provided once the patient is released from the hospital. CMS hopes that by paying for related care as part of a broad payment bundle, different provid­ers that treat a patient during a single episode will have incentives to better coordinate care, avoid unnecessary services, and improve pa­tient health. Most of the savings are expected to come from reducing spending on physician services during the hospital stay and efficien­cies in providing postacute care.

This brief describes the different models being tested and CMS’s experience with the project to date.

What’s Next?

Both CMS and providers are continuing to gain experience with and learn from the BPCI initiative. All four models have projects un­derway that will continue into 2016.

Congress gave CMS the authority to expand use of a tested model without requiring a change in law if CMS finds that the model re­duces spending without reducing the quality of care or improves the quality of care without increasing spending. CMS has not proposed to expand the use of any BPCI initiative model at this time but could do so in the future.

However, CMS is proposing to expand test­ing of concepts used in the BPCI initiative on a non-voluntary basis. Under its comprehensive care for joint replacement (CCJR) model, hos­pitals in the sixty-seven metropolitan areas selected for the model will receive a bundled payment for the inpatient stay and ninety days of postacute care.

While the structure of the CCJR model is similar to model 2, there are significant dif­ferences. Hospitals in selected areas will be re­quired to participate in the CCJR model (unless the hospital is already participating in certain tracks of the BPCI initiative), and hospitals in other areas will not be able to participate. All lower extremity joint replacement cases at hospitals within those geographic areas will receive the bundled payment; under the BPCI initiative, cases could be limited to those from specific episode initiators, such as only those physician group practices with which the hos­pital has a relationship. CMS will implement this new payment model on April 1, 2016.

CMS is also testing bundled payments for care that does not include an inpatient hospi­tal stay. Under its oncology care model, CMS is creating bundled payments for six-month episodes that start with the first claim for che­motherapy. This model is expected to start in spring 2016.