United States: CMS Announces Participants In Bundled Payment Initiative

The U.S. Centers for Medicare & Medicaid Services (CMS) recently announced the health care organizations chosen to participate in the Bundled Payments for Care Improvement (BCPI) Initiative. The BCPI Initiative represents a significant expansion of CMS's use of bundled payments in traditional Medicare, and is part of an effort to incentivize greater care coordination and increase provider accountability as the agency seeks to move away from its reliance on traditional fee-for-service payments.

On January 31, 2013, the U.S. Centers for Medicare & Medicaid Services (CMS) announced the health care organizations selected to participate in the Bundled Payments for Care Improvement (BPCI) Initiative. Under the BPCI Initiative, CMS will compensate participating providers via bundled payments rather than the traditional fee-for-service (FFS) payments for providing certain services to traditional Medicare beneficiaries. Bundled payments are designed to incentivize provider coordination and adoption of redesigned care processes by making a single payment for a set of services related to treatment of a particular condition during a pre-determined time period, the episode of care.

The BCPI Initiative builds on CMS's Acute Care Episode (ACE) Demonstration, which tested the effectiveness of providing bundled payments for a limited number of cardiac and orthopedic surgical procedures provided to traditional Medicare beneficiaries. The BPCI Initiative represents an expansion of CMS's experimentation with bundled payments in traditional Medicare as it applies to a much broader range of conditions (more Medical Severity Diagnosis Related Groups, or MS-DRGs) than the ACE Demonstration and is not limited to certain geographical areas.

Summary of Four Models

There are four different BPCI Initiative Models for applicants to choose from. Under Model 1, the bundled payment is limited to the acute care inpatient hospitalization, while Models 2–4 go beyond the inpatient hospitalization to include post-acute care. Model 1 applies to all MS-DRGs, while participants in Models 2–4 were able to choose to receive bundled payments for up to 48 different clinical condition episodes that CMS made available. Examples of available episodes include knee and hip replacement, stroke care and coronary bypass surgery.

  • Model 1: Under Model 1, the episode of care is limited to services provided during an acute care inpatient hospitalization. Participants provide CMS a standard discount off each MS-DRG (each applicant was required to specify how much of a discount it was proposing to offer CMS). All Part A services paid as part of the MS-DRG payment are included in the bundle; physician services will be paid separately. Hospitals and physicians will be permitted to share any gains generated from care redesign. CMS expects to announce a second opportunity to participate in Model 1 in the next several weeks for participation beginning in early 2014.
  • Models 2 and 3: The bundled payment in Models 2 and 3 applies to post-acute care; Model 2 also includes the inpatient acute care hospitalization. Model 2 and 3 applicants were able to propose episodes of care extending 30, 60 or 90 days after the hospital discharge (Model 2) or initiation of post-acute services (Model 3). In their application, participants were required to propose a target price for the bundled payment based on the historical Medicare FFS payments for the episode services with a discount applied. During the episode of care, participants will continue to receive FFS payments for all services related to the selected condition(s) provided to its Medicare patients. After the episode is complete, CMS will retrospectively compare the actual FFS payments made for episode services provided during the episode of care to the target price. Any amounts over the target price must be repaid to CMS and any savings may be distributed by participants to providers.
  • Model 4: The bundled payment in Model 4 applies to all services during an acute care inpatient stay and includes all related readmissions provided within 30 days after discharge. Unlike Models 2 and 3, under Model 4 CMS will make a single, prospective payment at the target price to the acute care hospital upon a beneficiary's hospitalization for the selected condition(s). All Part A and Part B services provided during the inpatient hospitalization that are related to the selected condition(s) are included in the bundle. Participating physicians and other providers will submit no-pay claims to Medicare and will be paid out of the bundled payment amount that is sent to the hospital. This Model is similar to the ACE Demonstration.

In the BPCI Initiative, applicants could ask for, and CMS indicated a willingness to grant, waivers of federal fraud and abuse laws to protect gain-sharing arrangements for care rendered by participating health care organizations.

Implementation will Proceed in Two Phases

Models 2–4 will operate under two phases. The participants announced on January 31 were the Phase 1 participants. Phase 1 extends from January to July 2013 and awardees are not at financial risk during this period. During this time, CMS and awardees will prepare for implementation and the assumption of financial risk. Phase 2 is scheduled to begin in July 2013 and only those Phase 1 participants approved by CMS will be permitted to participate. Phase 2 will be the beginning of risk-sharing where participants will be at risk if costs exceed the bundled payment amount for the episode. At this time, CMS has not given any indication it plans to solicit applications for additional participants in Models 2–4.

Beneficiary Choice of Provider

Beneficiaries that seek care from BPCI Initiative participants are permitted to seek care from any provider after the episode of care has begun, regardless of whether that provider is connected to the organization receiving the bundled payment. This freedom of provider choice limits the ability of participants to coordinate care amongst a beneficiary's providers and, consequently, may limit a participant's ability to control utilization and costs. Any FFS amounts paid by CMS to providers that are not participating in the BPCI Initiative would be included when calculating whether the actual expenditures for an episode of care were greater or less than the bundled payment target price. CMS suggested it would consider permitting providers to waive Medicare cost-sharing requirements for beneficiaries included in the initiative, although the January 31 announcement did not indicate if CMS took this step. Reduced cost-sharing could provide an incentive for beneficiaries to stay within a particular group of providers.

Bundled Payments Outside of Traditional Medicare

Medicare Advantage organizations and health insurers offering products in the commercial market are already implementing similar bundled payment arrangements for specified conditions. In these settings, managed care plans may be able to more effectively channel beneficiaries to the providers receiving the bundled payment, including through tiered or restricted network designs and cost-sharing incentives. In this way, managed care plans may be able to create greater certainty for providers that they will be able to coordinate an enrollee's care through the entire episode of care.

There are, however, other legal challenges that may exist outside of the traditional Medicare context. For example, state and federal limits on provider gain-sharing may apply as any CMS waiver on these limits would be limited to traditional Medicare. Because each proposed bundled payment arrangement could raise unique legal issues depending on the insurance markets at issue, the applicable state laws and the provider relationships involved, managed care plans and providers interested in implementing bundled payment arrangements should contact their regular McDermott Will & Emery lawyer or an author for assistance addressing these complex legal considerations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions