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Medicare Announces New Bundled Payment Model

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February 9, 2018

Medicare will soon introduce a voluntary program that will pay bundled prices for 29 inpatient and 3 outpatient procedures and any follow-up care for 90 days following discharge.  The payment will include care provided by hospitals, physicians, and post-acute providers, such as nursing homes and hospice services.


Called the Bundled Payments For Care Improvement Advanced, or BPCI Advanced, the program will begin in October, 2018, and continue through December, 2023.


Key details:

  • The Centers for Medicare & Medicaid Services (CMS) will pay providers initially on a fee-for-service basis, but then will reconcile those payments every six months with a bundled price that CMS concludes is appropriate to encompass all the services.


  • If a provider’s actual spending is below the bundled price, CMS will pay the provider the difference.  If the provider’s spending is above the bundled price, then the provider will owe CMS.


  • CMS will adjust the bundled payment level based upon how well the provider performs on seven quality and process measures.


  • Among the 29 inpatient procedures included in the program:  heart attack, coronary artery  bypass graft, hip fractures, major joint replacements, kidney failure, and congestive heart failure.


  • The three outpatient procedures are percutaneous coronary intervention, cardiac defibrillator, and back and neck (except spinal) fusion.


  • The program will be considered an Advanced Alternative Payment Model (AAPM) under the MACRA Quality Payment Program, which means that clinicians participating in BPCI Advanced may be eligible to receive a 5% annual incentive payment between 2019 – 2014.

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