New voluntary Medicare initiative will test bundled payment models The Centers for Medicare & Medicaid Services (CMS) announced last month that it will pilot four different models for bundling payments to physicians and hospitals. Under CMS’s new Bundled Payments for Care Improvement Initiative, hospitals, physicians, and others will be able to propose discounted fees for bundled payments across a single episode of care during a hospital stay in an acute care hospital and during post-discharge recovery. The pilot projects were authorized by last year’s federal health reform legislation. Currently, when a Medicare patient undergoes a course of treatment, the various providers involved are paid separately by Medicare, which, according to CMS officials, often results in inefficient, uncoordinated care. CMS believes that the new payment models will motivate providers to cooperate to improve quality and lower costs. Providers would be paid under the Medicare fee-for-service system, but at a discounted, negotiated rate. Any savings achieved from holding costs below the negotiated price could be shared among participating physicians and hospitals. Current Medicare gain-sharing rules prohibit hospitals from sharing savings with physicians who help them lower costs. The bundling initiative waives these prohibitions so that hospitals, physicians, and post-acute
AMA Launches 2011 Billing Code iPhone, iPad App The AMA released a free application that allows physicians to search for CPT billing codes. The app was developed to help physicians identify the correct E&M codes for billing purposes. The app is compatible with Apple’s top mobile products.
care providers can coordinate and share in savings. Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively. Through the bundled payments initiative, providers will have great flexibility in negotiating the fees, selecting conditions to bundle, developing the health care delivery structure, and determining how payments will be allocated among participating providers. However, the bundled payment will only be made to hospitals for distribution to the other providers. Therefore, CMA recommends that participating physicians, medical staffs and medical groups be fully engaged in the design and implementation of local pilot projects. Previous demonstration projects suggest tremendous savings potential. A recent heart bypass surgery bundled payment demonstra-
tion, for example, saved Medicare $42.3 million—about 10% of expected costs—and saved patients $7.9 million in coinsurance. More importantly, the program improved care and lowered hospital mortality. Providers interested in participating in the initiative must apply by September 22 for model 1 and by November 4 for models 2–4. More information about the various models and their requirements is available on the CMS Innovation Center website at http://www.innovations.cms.gov/areas-of-focus/patient-caremodels/bundled-payments-for-care-improvement.html. CMA is working to submit other California pilot proposals to the CMS Innovation Center that allow physicians in all modes of practice to participate in new physician-led delivery and payment models. (CMA Alert, September 6, 2011 issue)
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