On August 23 the U.S. Department of Health and Human Services (HHS) announced that physicians, hospitals, and other health care providers can apply to participate in the Bundled Payments for Care Improvement initiative (Bundled Payments initiative). The Centers for Medicare and Medicaid Services (CMS) Innovation Center’s Request for Applications (RFA) outlines four broad approaches to bundled payments. Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively. Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. Participants in these models would be paid for their services under the traditional fee-for-service (FFS) system. After the conclusion of the episode, the total payments would be compared with the target price. Participating providers may then be able to share in those savings. 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. 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. See the Federal Register posting at http://www.ofr.gov/OFRUpload/OFRData/2011-21707_PI.pdf. See also the HHS fact sheet at http://www.healthcare.gov/news/factsheets/bundling08232011a.html. For more information about the various models and the initiative itself, please see the Bundled Payments for Care Improvement initiative web site at: http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html. Interested parties may obtain answers to specific questions by e-mailing CMS at: BundledPayments@cms.hhs.gov.
