Hospitals Sought to Test Bundled Payment

The Centers for Medicare and Medicaid Services (CMS) has reopened its search for hospitals interested in testing a bundled payment model.

On Friday CMS published notice in the Federal Register that it is seeking “additional organizations to be considered for participation in Model 1 of the Bundled Payments for Care Improvement initiative.” Those selected will join the 31 other healthcare providers who were selected in the first round.

With bundled payments, healthcare providers receive a lump sum for a group of patients rather than individual fees-for-service. Model 1 is one of four bundled payment models being tested by CMS’s Center for Medicare and Medicaid Innovation (CMMI), and covers patient stays in acute care hospitals. According to CMS, “Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System (IPPS) used in the original Medicare program. Medicare will continue to pay physicians separately for their services under the Medicare Physician Fee Schedule. Under certain circumstances, hospitals and physicians will be permitted to share gains arising from the providers’ care redesign efforts.”

Hospitals interested in joining this experiment have until July 31 to apply by submitting an “Open Period Information Intake” form. All providers who are selected in the second round will test bundled payments in 2014.

But what if you are a healthcare provider that believes bundled payments are not for you, but you have an idea for new way to pay for healthcare in this country? CMMI also has announced the second round of its Healthcare Innovation Awards, offering $1 billion to healthcare providers interested in creating and testing “new payment models to support the service delivery models,” according to the CMMI announcement. The federal agency is seeking models that reduce “Medicare, Medicaid, and/or CHIP costs in outpatient and/or post-acute settings,” that improve care for “populations with specialized needs,” that “test approaches for specific types of providers to transform their financial and clinical models, and that “improve the health of populations geographically, clinically, or by socioeconomic class, through activities focused on engaging beneficiaries, prevention, wellness, and comprehensive care that extend beyond the clinical service delivery setting.”

“All applicants must submit, as part of their application, the design of a payment model that is consistent with the new service delivery model that they propose,” according to the announcement. CMS will accept letters of intent to apply between June 1 and June 28, and then will be accepting applications from June 14 to Aug. 15.