The Centers for Medicare & Medicaid Service (CMS) has announced that thousands of providers have moved forward with the Bundled Payments for Care Improvement (BPCI) project that rewards providers based on the quality, not quantity, of care delivered to patients. CMS reports that over 2,100 healthcare providers implemented the bundled payment system in which they assume financial risk for episodes of care, defined by CMS as “the set of services provided to treat a clinical condition or procedure, such as a heart bypass surgery or a hip replacement.”
Under the BPCI initiative, organizations and healthcare providers enter into payment arrangements that include financial and performance accountability for an entire episode of care. By bundling payment for services that a patient receives within a single care episode, physicians, hospitals, and healthcare providers are encouraged to collaborate and coordinate patient care. The goal, according to a CMS press release, is “better care, smarter spending, and healthier people.”
All fees are set based on the entire episode of care, rather than paying individually for each treatment or service on a fee-for-services basis. The project has four episode-based payment models that vary according to provider type and post-hospitalization bundle length. Going over the set costs could mean penalties for participating organizations. The hope is that the shared payment pool will encourage healthcare providers to work effectively together by coordinating care and managing costs.
Earlier this year, CMS announced it aims to have 30 percent of Medicare payments through alternative payment models by 2016, and 50 percent of payments by 2018. Along with the Accountable Care Organizations (ACO) discussed in our previous blog, the BPCI initiative is a considerable step forward in helping CMS achieve this alternative payment goal.
Clearly, CMS is making progress on its vision of changing the healthcare system to one based on value. For their part, providers are embracing the change for a number of reasons: to promote quality and outcomes for their patients; the financial upside from rewards for success; and the prospect of losing revenue if they remain solely focused on the old fee-for-service transaction model. While it has its risk, provider are concluding that being proactive rather than reactive better protects their financial futures.