Affordable Care Act Bundled Hospital Payments
<http://www.hhs.gov/news/press/2011pres/08/20110823a.html> News Release
FOR IMMEDIATE RELEASE
August 23, 2011
Contact: HHS Press Office
Affordable Care Act initiative to lower costs, help doctors and
hospitals coordinate care
The U.S. Department of Health and Human Services (HHS) today announced a
new initiative to help improve care for patients while they are in the
hospital and after they are discharged. Doctors, hospitals, and other
health care providers can now apply to participate in a new program
known as the Bundled Payments for Care Improvement initiative (Bundled
Payments initiative). Made possible by the Affordable Care Act, it will
align payments for services delivered across an episode of care, such as
heart bypass or hip replacement, rather than paying for services
separately. Bundled payments will give doctors and hospitals new
incentives to coordinate care, improve the quality of care and save
money for Medicare.
"Patients don't get care from just one person it takes a
team, and this initiative will help ensure the team is working
together," said HHS Secretary Kathleen Sebelius. "The Bundled
Payments initiative will encourage doctors, nurses and specialists to
coordinate care. It is a key part of our efforts to give patients better
health, better care, and lower costs."
In Medicare currently, hospitals, physicians and other clinicians who
provide care for beneficiaries bill and are paid separately for their
services. This Centers for Medicare & Medicaid Services (CMS)
initiative will bundle care for a package of services patients receive
to treat a specific medical condition during a single hospital stay
and/or recovery from that stay this is known as an episode of
care. By bundling payment across providers for multiple services,
providers will have a greater incentive to coordinate and ensure
continuity of care across settings, resulting in better care for
patients. Better coordinated care can reduce unnecessary duplication of
services, reduce preventable medical errors, help patients heal without
harm, and lower costs.
The Bundled Payments initiative is being launched by the new Center for
Medicare and Medicaid Innovation (Innovation Center), which was created
by the Affordable Care Act to carry out the critical task of finding new
and better ways to provide and pay for health care to a growing
population of Medicare and Medicaid beneficiaries.
Released today, the Innovation Center's Request for Applications
(RFA) outlines four broad approaches to bundled payments. Providers
will have flexibility to determine which episodes of care and which
services will be bundled together. By giving providers the flexibility
to determine which model of bundled payments works best for them, it
will be easier for providers of different sizes and readiness to
participate in this initiative.
"This Bundled Payment initiative responds to the overwhelming calls
from the hospital and physician communities for a flexible approach to
patient care improvement," said CMS Administrator Donald Berwick,
M.D. "All around the country, many of the leading health care
institutions have already implemented these kinds of projects and seen
The Bundled Payments initiative is based on research and previous
demonstration projects that suggest this approach has tremendous
potential. For example, a Medicare heart bypass surgery bundled payment
demonstration saved the program $42.3 million, or roughly 10 percent of
expected costs, and saved patients $7.9 million in coinsurance while
improving care and lowering hospital mortality.
"From a patient perspective, bundled payments make sense. You want
your doctors to collaborate more closely with your physical therapist,
your pharmacist and your family caregivers. But that sort of common
sense practice is hard to achieve without a payment system that supports
coordination over fragmentation and fosters the kinds of relationships
we expect our health care providers to have," said Dr. Berwick.
Organizations interested in applying to the Bundled Payments for Care
Improvement initiative must submit a Letter of Intent (LOI) no later
than September 22, 2011 for Model 1 and November 4, 2011 for Models 2,
3, and 4. For more information about the various models and the
initiative itself, please see the Bundled Payments for Care Improvement
initiative web site at:
To view a factsheet on the Bundled Payments for Care Improvement
Interested parties may obtain answers to specific questions by e-mailing
CMS at: BundledPayments@... <mailto:BundledPayments@...>
This initiative is part of a broader effort by the Obama Administration
to improve health, improve care, and lower costs. A brief summary of
other efforts, including those authorized by the Affordable Care Act,
can be found at:
For more information about the CMS Innovation Center, please visit:
http://www.innovations.cms.gov <http://www.innovations.cms.gov/> .
Applicants for these models would also decide whether to define the
episode of care as the acute care hospital stay only (Model 1), the
acute care hospital stay plus post-acute care associated with the stay
(Model 2), or just the post-acute care, beginning with the initiation of
post-acute care services after discharge from an acute inpatient stay
(Model 3). Under the fourth model, CMS would make a single, prospective
bundled payment that would encompass all services furnished during an
inpatient stay by the hospital, physicians and other practitioners.
Interested organizations must submit a nonbinding letter of intent by
September 22, 2011 for Model 1 and November 4, 2011 for Models 2-4 as
described in the Bundled Payments for Care Improvement initiative RFA.
For applicants wishing to receive historical Medicare claims data in
preparation for Models 2-4, a separate research request packet and data
use agreement must be filed in conjunction with the Letter of Intent.
Final applications must be received on or before October 21, 2011 for
Model 1 and March 15, 2012 for Models 2-4.
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