During the course of a Medicare beneficiary’s single illness or course of treatment, many individual providers have traditionally billed Medicare for services provided. This traditional model has encouraged payments based on quantity of services, rather than focusing on the quality of care and services provided to the beneficiary. It has not encouraged the coordination of care between these individual providers (i.e.: hospitals, post-acute facilities and providers, physicians and other practitioners).

In January 2013, CMS announced the providers that will participate in BCPI – the “Bundled Payments for Care Improvement Initiative.” This three-year initiative was developed to encourage the coordination of care across all phases of the beneficiary’s single illness course of treatment. By implementing provider accountability, it is hoped that the new reimbursement model will lead to higher quality of care and lower costs to the Medicare trust. During the three-year initiative, providers are able to choose from 48 DRGs (Diagnostic Related Groups) to test for this new reimbursement model. As of January 30, 2014, 232 acute care hospitals, skilled nursing facilities, physician group practices, long term care hospitals and home health agencies have entered into agreements with CMS to participate in the initiative, which is only one of the reform programs initiated under the Affordable Care Act.

There are four models in the program from which providers can choose to participate. These models each define an episode of care and link providers together for bundled reimbursement based on services provided during the episode of care:

Model 1 – Retrospective Acute Care Hospital Stay Only

The episode of care in this model includes only the inpatient stay in an acute care hospital. The hospital will be reimbursed at a discounted rate based on Medicare’s Inpatient PPS rates. Physicians will still be paid separately for their services, but may be able to share in profits arising from the restructured reimbursement model.

Model 2 – Retrospective Acute Care Hospital Stay plus Post-Acute Care

The episode of care in this model includes the acute care hospital inpatient stay and all related services incurred during the episode of care, which can end 30, 60 or 90 days after the hospital discharge.

Model 3 – Retrospective Post-Acute Care Only

The episode of care in this model begins with the start of post-acute services such as admission to a skilled nursing facility, inpatient rehabilitation facility, long term care hospital or the start of home health services. Services must begin within 30 days of discharge from the inpatient hospital stay, and will end either 30, 60 or 90 days after the start of the episode.

Model 4 – Acute Care Hospital Stay Only

Providers electing to participate in this model will receive a single bundled payment that includes all reimbursement for all services provided to the beneficiary during the course of the illness or episode. Physicians and other practitioners providing care to the beneficiary during this course of illness will submit a “no-pay” claim to Medicare, and will be reimbursed by the hospital out of the bundled payment. Any hospital readmissions within 30 days of discharge for related issues will be included in the bundled payment amount received for the initial admission.

Need more information or want to locate participating providers in your state? Go to:

http://innovation.cms.gov/initiatives/bundled-payments

Discuss: Is your local referring hospital participating in one of the 4 BCPI models? If they are participating in the model that includes the patient's Post-Acute Care period, would your facility participate in the initiative?