Another program to watch: Bundled Payments Initiative

Thursday, August 25, 2011

WASHINGTON - The U.S. Department of Health and Human Services announced last week a new program to better coordinate care between healthcare providers, including DME providers.

The voluntary program, Bundled Payments for Care Improvement Initiative, bundles payments for services delivered across an episode of care, rather than paying for them separately. The goal: Healthcare providers will have new incentives to coordinate care, improve quality of care and save money for Medicare.

The Center for Medicare and Medicaid Innovation, which was created by the Affordable Care Act, is spearheading the program.

An application to participate in the program includes four models for bundling payments, two of which include DME. In model 2, the episode of care would include the inpatient stay and post-acute care and would end, at the applicant's option, a minimum of 30 or 90 days after discharge; 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, the bundle would include physicians' services, care by post-acute providers, related readmissions and other services proposed in the episode definition, such as clinical lab services, DMEPOS and Part B drugs.

According to a CMS release: The target price will be discounted from an amount based on the applicant's historical fee-for-service payments for the episode. Payments will be made at the usual fee-for-service payment rates, after which the aggregate Medicare payment for the episode will be reconciled against the target price. Any reduction in expenditures beyond the discount reflected in the target price will be paid to the participants to share among the participating providers.

The program is based on research and previous demonstration projects that suggest this approach has tremendous potential. For example, a bundled payment demonstration for Medicare heart bypass surgery saved the program $42.3 million or roughly 10% of expected costs, and saved patients $7.9 million in coinsurance, while improving care and lowering hospital mortality.

Organizations interested in applying to the Bundled Payments Initiative must submit a letter of intent no later than Nov. 4 for models 2 and 3.

For an application and more information, go here. Get answers to your questions at