On August 13, 2015, the Centers for Medicare & Medicaid Services (CMS) announced that 2,115 providers are participating in Phase 2 of the Medicare Bundled Payment for Care Improvement initiative (BPCI). These providers include 360 awardees and 1,755 episode initiators actively involved in care redesign. Participants include acute care hospitals (423), physician group practices (441), home health agencies (101), inpatient rehabilitation facilities (9), long-term care hospitals (1), and skilled nursing facilities (1071).

Participants in the BPCI choose from four episode-based payment models:

Model 1: The episode is defined as the acute care inpatient hospitalization for all DRGs. The retrospective bundled payment is for all Part A services paid as part of the MS-DRG payment.

Model 2: The episode is defined as the inpatient hospitalization plus the post-acute care period for selected DRGs. The services encompassed by the retrospective bundled payment include all non-hospice Part A and Part B services during the initial inpatient stay and post-acute period, including readmissions.

Model 3: The episode includes the post-acute period only for selected DRGs. The retrospective bundled payment covers non-hospice Part A and B services furnished during the post-acute care period as well as readmissions.

Model 4: The episode is the acute care inpatient hospitalization and readmissions for selected DRGs. The prospective bundled payment is for all non-hospice Part A and B services.

Over half of the participants (1,353 awardees and episode initiators) are participating in Model 3. Seven-hundred and forty-one (741) participants are participating in model 2. Model 1 has 11 participants, and Model 4 has 10 participants. The BPCI has been implemented in two phases. Phase 1 was considered the “preparation period,” during which CMS educated participants and shared data with participants. As of July 1, 2015, all participants were required to transition at least one episode into Phase 2, under which they assume financial risk. Participants are awarded for improving quality and reducing the cost of care, and are penalized if their care exceeds cost thresholds.

CMS highlighted the BPCI is successfully achieving its goals of encouraging coordinated care and focusing on the episode of care rather than siloed healthcare procedures. One month prior to CMS’ announcement providing an update related to the BPCI, CMS issued a proposed rule to establish a new, mandatory bundled payment program in certain geographic areas. Under the Comprehensive Care for Joint Replacement model, CMS would provide acute care hospitals in 75 geographic areas with bundled payments for episodes of care involving lower extremity joint replacement or reattachment of a lower extremity. CMS proposed that the episode include physicians’ services, inpatient hospital services (including readmissions) with certain exceptions, SNF services, HHA services, LTCH services, IRF services, inpatient psychiatric facility services, hospital outpatient services, independent outpatient therapy services, clinical laboratory services, durable medical equipment, Part B drugs and hospice. CMS clearly believes that bundled payments for episodes of care are effective value-based payment models that promote care coordination.

Downloads:

Expansion of Medicare Bundled Payment for Care Improvement Initiative