CMS Testing Four Bundled Payment Models

September 20, 2011

CMS recently extended to Oct. 6 the application deadline for hospitals interested in testing the first of four bundled payment models. It will be a while until you find out while which system the agency ultimately chooses, but this is certain - you will be affected.

CMS recently extended to Oct. 6 the application deadline for hospitals interested in testing the first of four bundled payment models. It will be a while until you find out while which system the agency ultimately chooses, but this is certain - you will be affected.

Three models are retrospective bundling systems, and the fourth is prospective. Even if your hospital isn’t a testing ground, knowing the basics of each model could save you future confusion.

Model 1: This model defines an episode-of-care as an inpatient stay in the general acute-care hospital. CMS would reimburse you for your services separately under the Medicare Physician Fee Schedule, and hospitals would receive a discounted payment based on Inpatient Prospective Payment System payment rates. If any gains from improved coordination of care occur, hospitals and providers would share them.

Model 2: As with Model 1, Model 2 includes the inpatient stay, but it would also encompass post-acute care ending at either 30 or 90 days after discharge. Medicare would pay a lump payment for your services in post-acute provider care, related readmissions, and other services, such as durable medical equipment, clinical lab services, prosthetics, Part B drugs, etc. To get a target price, Medicare would discount an amount based on the fee-for-service payments you usually receive for the episode. Payments would be doled out at these normal fee-for-service rates, and Medicare would reconcile them against the target price.

Model 3: This model mirrors Model 2 except episodes-of-care begin at inpatient-stay discharge and ends no sooner than 30-days post-discharge.

Model 4: With this prospective payment model, CMS would make a single, bundled payment to the hospital. It encompasses all inpatient-stay services provided by the hospital and all providers. You would be required to submit “no-pay” claims to Medicare, and the hospital would reimburse you out of its overall bundled payment.