The Definitive Blog

CMS Implements mandatory bundled payment program

The Bundled Payment for Care Improvement Initiative (BPCI) is a Centers for Medicare & Medicaid Services (CMS) program that allows healthcare providers to enter into new payment models that encourage lower cost while offering more coordinated and higher quality care across an entire patient episode. Instead of the traditional fee-for-service payment model, providers are given a lump sum payment to treat a patient across an entire episode. At the moment, providers can choose to participate in up to four bundled payment models. With these models, the organizations involved enter into agreements that place financial and performance accountability on how they care for patients.

The original 4 models each target different organizations as well as the focus of care.

  • Model 1 focuses on Retrospective Acute Care Hospital Stay Only. It includes all DRGs the hospital sees and emphasizes the care given during an inpatient stay at the hospital. The discounts a hospital receives can range from 0% in the first 6 months to 2% in year 3.
  • Model 2 builds off of the first model and expands to post-acute care providers. The DRGs available in this model, and all subsequent models, are only select inpatient DRGs which those applicants must propose to CMS. The expected discount for this model is a minimum of 3% for 30-89 days post-discharge services and a minimum of 2% for 90+ days post-discharge.
  • Model 3 builds off of the first two to include long-term care facilities, inpatient rehab facilities, and home health agencies, but focuses on post-discharge services only. The expected discount for these organizations varies from organization to organization and is proposed by each applicant to CMS.
  • Model 4 organizations are the same types as those involved in the first model, and focus on acute care for the proposed DRGs. The discount received for this model is a minimum of 3% and can increase depending on the DRGs approved by CMS.

Definitive Healthcare is currently in the process of updating its database to include all the hospitals that are still participating in this program, allowing customers to search depending on which model a hospital participates in.

The four models currently available are optional, and individual organizations are able to enter into each one on their own accord. Recently though, CMS announced a new, mandatory bundled payment program. Comprehensive Care for Joint Replacement (CJR) will make hospitals financially responsible for patient recovery 90-days after a knee or hip replacement surgery. Initially, 789 pilot hospitals from 67 regions across the United States will be placed in this new program. These hospitals will have to adhere to strict quality metrics and keep the care costs from readmissions low for the first 90 days after discharge. Underperforming hospitals will face severe cost penalties and can lose the ability to participate in savings gains. Hospitals will also have the opportunity to donate $1,000 per Medicare beneficiary for patient engagement IT and services. For companies selling patient engagement software, this new program creates a business opportunity of roughly $400 million. Along with this technology incentive, CMS will provide incentives for Patient Reported Outcomes (PRO). Hospitals that volunteer total joint replacement patient-reported outcomes can improve their composite quality scores and participate in physician gain sharing.

Definitive Healthcare tracks all the quality metrics of participating hospitals as well as the number of procedures performed at individual hospitals, including the DRGs for this particular program.

One of the more interesting aspects of this new program will be the effect it will have on the hospitals participating in Models 2, 3, and 4 that have DRG codes 469 and 470 as their only approved DRGs. These specific DRGs are the focus of the new mandatory program created by CMS and it may be only a matter of time until those hospitals are added to the new program.

Definitive Healthcare has the most up-to-date, comprehensive and integrated data on hospitals, physicians and other healthcare providers. Our hospitals database tracks nearly 7,600 US hospitals and includes their participation in the BCPI, hospital specific DRGs, and patient engagement software.

December 15, 2015