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CMS Approves 500 Provider Groups for Bundled Payments

February 10, 2013


The Centers for Medicare & Medicare services announced that more than 500 provider organizations will begin participating in the Bundled Payments for Care Improvement Initiative Authorized under the Affordable Care Act, the program will test how bundling payments for episodes of care can lead to better care coordination among providers and cost-savings for Medicare.


Bundled payments cover all the services a patient receives for a medical condition during a specific interval of time, known as an episode of care. This episode can vary widely.  It might include payment for the entire inpatient hospital stay, or for care starting just before discharge and continuing for a period afterward.


The CMS initiative includes four models of bundling payments, varying by the types of health care providers involved and the services included in the bundle.

  • Under Model 1, the episode of care is defined as the inpatient stay in the acute care hospital.  Medicare will pay the hospital a discounted amount based on the payment rates under the Medicare Inpatient Prospective Payment system. But Medicare would continue to pay physicians separately for their services under the Medicare Physician Fee Schedule. Under certain circumstances, hospitals and physicians will be permitted to share savings arising from providers’ care redesign efforts.
  • In Model 2, the episode of care will include the inpatient stay and all related services during that period for as many as 48 different clinical conditions. The episode will end  30, 60, or 90 days following hospital discharge. Participating organizations can select among the 48 clinical condition episodes.
  • For Model 3, the episode of care will be triggered by an acute care hospital stay and will begin at initiation of post-acute care services with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. The post-acute care services included in the episode must begin within 30 days of discharge from the inpatient stay and will end either a minimum of 30, 60, or 90 days after the initiation of the episode. Participants can select up to 48 different clinical condition episodes.
  • Under Model 4, CMS will make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians, and other practitioners. Physicians and other practitioners will submit “no-pay” claims to Medicare and will be paid by the hospital out of the bundled payment. Related readmissions for 30 days after hospital discharge will be included in the bundled payment amount. Participants can select up to 48 different clinical condition episodes.


Click here for details on the 500 health care facilities that were selected and the 48 episodes that they will be testing.


Click here for a CMS webpage on bundled payments, including an explanation of the four models.

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