November 4 Deadline Looms for Certain CMS Bundled Payment Models

Wednesday, November 2nd, 2011
This post was written by Patricia Donovan

Model 4 of the new CMS bundled payments program offers “the best balance of risk and reward” as well as opportunities for gainsharing, advises Jim Reilly, managing partner with TRG Health Care Solutions. This option appears to have the highest level of interest among providers Reilly has communicated with.

The four models included in the new CMS initiative are:

  • Model 1: Retrospective bundled payment for all inpatient hospital stays;
  • Model 2: Retrospective payment model for the acute inpatient hospital stays AND post-acute care;
  • Model 3: Retrospective payment model for post-acute care only;
  • Model 4: Prospective payment for select acute care hospital stay only – Providers select which MS-DRGs to include

Providers interested in participating in Models 2 through 4 have until Friday, November 4 to submit letters of intent to participate. Model 1’s deadline has already passed, Reilly noted, and interest in Model 2 is limited due to associated risk from post-acute care.

The veteran of previous CMS forays into bundled payments walked through the four models and timelines during last month’s webinar on “Evaluating CMS’ Bundled Payment Initiative: Operational, Financial and Clinical Considerations.”

Hospitals are more familiar with bundled payments than physician practices, who are traditionally paid by CMS on a fee for service basis, noted Reilly. CMS hopes the new bundled pricing initiative will incentivize hospitals and physicians to work more closely together to improve outcomes.

Reilly reported a “neutral to positive” assessment of CMS’s Acute Care Episode (ACE) pilot from the five participants in that recent CMS bundled payments trial. Reilly worked with all five health systems on the ACE project, including Baptist Health System. Model 4 is also most like the ACE model, and offers a prospective payment, in that CMS will pay one fee after the care is delivered.

Reilly posed several questions for providers to consider before committing to participate, including whether bundled payments will effectively align physicians, result in financial gain, improve quality benchmarks and inspire innovation and change in the healthcare industry.

His advice to potential participants? Start educating your physicians on the payment process, and start now: the application is extremely labor-intensive.

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