The Bundled Payments for Care Improvement (BPCI) program links the payments made for multiple services that beneficiaries receive during an episode of care. The initiative covers four broad models, which let organizations enter into payment arrangement including financial and performance accountability for episodes of care. The models may bring about higher quality and more coordinated care at a lower cost than with the exiting Medicare program.
Usually, Medicare makes separate payments to each provider for the individual services that they furnish to beneficiaries for any single illness or treatment duration. However, this approach has been found to cause fragmentation in care, and often lowers coordination when different providers and healthcare settings are involved. Payment takes care of the quantity of services offered by providers instead of the quality of care they provide. Bundled payments on the other hand, can align the incentives for these providers so that it is in their own interests to coordinate across specialties and settings.
BPCI was devised and developed by the Center for Medicare and Medicaid Innovation, which itself was formed under the Affordable Care Act to bring in new modes of payment and service delivery models which can reduce Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) expenditures. This is meant to go hand in hand with boosting the quality of care that beneficiaries are able to receive. For the duration of the initiative, CMS will cooperate with component organizations to check whether the models being tested will in fact improve patient care while lowering costs to Medicare.
Model 1 episode of care comprises patient stay in the acute care hospital. Medicare pays a discounted amount to the provider based on the rates set up under Inpatient Prospective Payment System used in the original Medicare program. Physicians continue to receive separate payments for their services under the Medicare Physician Fee Schedule. The first cohort of Awardees in this model commenced in April 2013 and finished on March 31, 2016. The rest will close their participation on December 31, 2016.
Models 2 and Model 3 carry a bundled payment arrangement of retrospective nature, where the actual expenses are matched against a target price for the episode of care. Model 2 episode covers inpatient stay in an acute care facility as well as the post-acute care, and all related services up to 90 days after the discharge.
Model 3 episode of care starts off with acute care hospital stay, but begins at initiation of post-acute care services with a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. In Model 4, a bundle payment is made to the hospital which covers all services furnished by the practice during episode of care.