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Officials at the Centers for Medicare and Medicaid Services in August released a request for applications (RFA) inviting physicians, hospitals, and other health care providers to participate in the Bundled Payments for Care Improvement initiative. The program, which was mandated under the Affordable Care Act, offers options for bundling payments for a hospital stay, for post-discharge services, or for both the hospital stay and the post-discharge care.
Instead of paying hospitals, physicians, and other providers separately, this initiative would combine the payment over an episode of care for a specific condition. The aim of the program is to encourage clinicians to work together and provide better continuity of care, resulting in better quality and lower costs.
"Today, Medicare pays for care the wrong way," Health and Human Services Secretary Kathleen Sebelius said during a teleconference to announce the bundling program. "Payments are based on the quantity of care, the amount of services delivered, not the quality of that care. And that leaves us too often with a system that actually can punish the providers that are most successful at getting and keeping their patients healthy."
The new bundling program offers three ways for health care providers to receive payment retrospectively, and one way to receive a prospective payment. Under some of the retrospective payment models, CMS and the providers would agree on a target payment amount for the episode of care and providers would be paid under the original Medicare fee-for-service system, but at a negotiated discount of 2% to 3% or greater. At the end of the care episode, the total payment would be compared with the target price and providers would be able to share in the savings, according to CMS.
Under prospective payment model, CMS would make a single bundled payment to the hospital to cover all services provided during the inpatient stay by the hospital, physicians, and other providers. That payment would offer at least a 3% discount to Medicare. Under this option, physicians and other providers would submit "no pay" claims to Medicare and the hospital would pay them out of the single bundled payment.
In addition to the options of prospective or retrospective payment, providers could choose how long the episode of care will be and what conditions they want to bundle payment for, and what services would be included in the payment. CMS officials said they wanted to make the program flexible so that a range of hospitals, physicians, and other providers could participate.
The American College of Surgeons General Surgery Coding and Reimbursement Committee (GSCRC) has been actively studying how bundled payments could be applied in surgery. The ACS believes that critical to the success of any bundling initiative is ensuring that the bundle is clinically coherent. The ACS GSCRC will continue this work and their discussions with the administration, CMS, and other stakeholders to ensure that any possible bundled payments in surgery will improve patient care.
Organizations interested in applying must submit a letter of intent by Sept. 22 for Model 1 and by Nov. 4 for Models 2, 3, and 4. More information on the program and how to apply is available at www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.
Dr. Richard Gilfillan, the acting director of the CMS Innovation Center, which is overseeing the bundling initiative, said he expects that hundreds of organizations will apply. The program is a unique opportunity for hospitals to redesign their systems to promote better care coordination, Dr. Gilfillan said, and have that effort supported through Medicare payments.
The idea is to eliminate the traditional barriers between physicians and other providers – both inpatient and outpatient – all of whom may be involved in the care of a single condition, said Dr. Nancy Nielson, senior advisor to the CMS Innovation Center and past president of the American Medical Association.
The AMA was still reviewing the bundled payment details at press time, but Dr. Cecil B. Wilson, AMA immediate past president, said the organization will urge federal officials to encourage applications for physician-led bundling projects. "For this to be successful, and for physicians to participate actively, then they need to be a part of that process rather than just some larger corporation or larger hospital system or health plan that’s organizing these," he said. "We think those are important as well, but we also think it’s important that physicians be a part of that leadership."
Health care consultant Robert Minkin urged physicians to seriously consider applying for the bundling program. The program is a sentinel event in the move from fee for service to more centralized, coordinated care model, he said.
This program should result in multiple benefits to everyone. By identifying and reducing frontline costs incurred by surgeons, physicians, and other providers, costs to the entire system are eliminated rather than simply shifted to another part of the system. We should applaud this kind of incisive "surgical strike" and help CMS identify other similar opportunities.
Dr. Magruder C. Donaldson is the chairman of surgery at Metrowest Medical Center in Framingham, Mass. He is also an associate medical editor of Vascular Specialist.
This following is the complete text of Dr. Donaldson's comments, which were abbreviated in print.
| Dr. Craig Donaldson |
The rationale for bundled payments is not only to reduce health care expenditures by removing the piece work, volume driven reimbursement system vulnerable to duplication, waste and fraud. More importantly, bundling should stimulate better organization, teamwork and coordination of services resulting in better care quality and outcomes.
Preventive measures and multidisciplinary disease-oriented programs should be strengthened. Evidence is strong that bundling will work, sufficient to convince the Centers for Medicare & Medicaid Services (CMS) to initiate a Request for Applications (RFA) on August 23 for providers to test and develop four models for bundling. The RFA can be viewed at www.innovations.cms.gov for more detail.
The four models focus on selected “episodes of care”, providing a negotiated bundled price for each episode. Unlike managed care which bases reimbursement on “covered lives”, payment for an episode of care such as a femoropopliteal bypass would bundle services for the episode, including inpatient, post-acute care rehabilitation, lab work and other services and related readmissions over a defined interval of time, depending on the model.
The four models include three retrospective plans and one prospective plan.
Under the retrospective plans (Models 1-3) CMS and the applicant provider set a target price for a defined episode of care by applying a discount to total costs for a similar episode of care based upon historical data. Payments would be made under the core Medicare system (not including Medicare Advantage plans) at the negotiated discount. At the end of the episode, total payments would be compared with the target price. Participating providers could then be able to share in any savings.
Under the prospective plan (Model 4) a single negotiated bundled payment for inpatient care would be made to the hospital for the episode, from which practitioners would be paid by the hospital.
The fundamental goal is alignment of incentives to create more efficient, better organized care. Disease prevention and improved care quality will result, with cost savings a byproduct. The fact that CMS will share any savings gained through the retrospective plans indicates which priority is their first.
All of the models will require strong leadership and cooperation among caregivers, most importantly hospitals and physicians. Integrated systems with employed physicians and surgeons would be more likely to apply for prospective bundling under Model 4. Less centralized systems would more likely choose Model 1 in which hospitals are paid a negotiated bundled and discounted price and physicians would be reimbursed per usual Medicare fee-for-service but could share in gains arising from better care coordination.
Now more critical than ever, development and strengthening of physician hospital organizations (PHOs) and especially Accountable Care Organizations (ACOs) will be central to the CMS initiative. Since bundling involves sharing in multiple ways, physicians and especially surgeons will need to work energetically with other members of the care team on matters ranging from governance to database perfection to fair quantitation and monitoring of disbursements to team members for each episode of care.
For surgeons in general and many vascular surgeons, it will be important to continue mending fences with the forces of integration and organizational innovation in our communities. Changes such as the electronic medical record, e-prescribing and membership in the local PHO or ACO will keep us “in the loop”. Institutional participation in quality programs such as the American College’s National Surgical Quality Improvement Program (NSQIP) and the Society for Vascular Surgery’s Vascular Quality Initiative (VQI) will be increasingly important, along with ongoing support for hospital quality and safety efforts such as the Surgical Care improvement Program (SCIP) and enhanced use of the surgical checklist.
At heart, most physicians and surgeons know that we need significant change in our system. The CMS proposal looks like a step in the right direction. It is hoped that many of our institutions will respond to the RFA and participate in designing and testing plans under one of the four proposed models. This project cannot succeed without the wisdom and full involvement of physicians and surgeons.
This program should result in multiple benefits to everyone. By identifying and reducing frontline costs incurred by surgeons, physicians, and other providers, costs to the entire system are eliminated rather than simply shifted to another part of the system. We should applaud this kind of incisive "surgical strike" and help CMS identify other similar opportunities.
Dr. Magruder C. Donaldson is the chairman of surgery at Metrowest Medical Center in Framingham, Mass. He is also an associate medical editor of Vascular Specialist.
This following is the complete text of Dr. Donaldson's comments, which were abbreviated in print.
| Dr. Craig Donaldson |
The rationale for bundled payments is not only to reduce health care expenditures by removing the piece work, volume driven reimbursement system vulnerable to duplication, waste and fraud. More importantly, bundling should stimulate better organization, teamwork and coordination of services resulting in better care quality and outcomes.
Preventive measures and multidisciplinary disease-oriented programs should be strengthened. Evidence is strong that bundling will work, sufficient to convince the Centers for Medicare & Medicaid Services (CMS) to initiate a Request for Applications (RFA) on August 23 for providers to test and develop four models for bundling. The RFA can be viewed at www.innovations.cms.gov for more detail.
The four models focus on selected “episodes of care”, providing a negotiated bundled price for each episode. Unlike managed care which bases reimbursement on “covered lives”, payment for an episode of care such as a femoropopliteal bypass would bundle services for the episode, including inpatient, post-acute care rehabilitation, lab work and other services and related readmissions over a defined interval of time, depending on the model.
The four models include three retrospective plans and one prospective plan.
Under the retrospective plans (Models 1-3) CMS and the applicant provider set a target price for a defined episode of care by applying a discount to total costs for a similar episode of care based upon historical data. Payments would be made under the core Medicare system (not including Medicare Advantage plans) at the negotiated discount. At the end of the episode, total payments would be compared with the target price. Participating providers could then be able to share in any savings.
Under the prospective plan (Model 4) a single negotiated bundled payment for inpatient care would be made to the hospital for the episode, from which practitioners would be paid by the hospital.
The fundamental goal is alignment of incentives to create more efficient, better organized care. Disease prevention and improved care quality will result, with cost savings a byproduct. The fact that CMS will share any savings gained through the retrospective plans indicates which priority is their first.
All of the models will require strong leadership and cooperation among caregivers, most importantly hospitals and physicians. Integrated systems with employed physicians and surgeons would be more likely to apply for prospective bundling under Model 4. Less centralized systems would more likely choose Model 1 in which hospitals are paid a negotiated bundled and discounted price and physicians would be reimbursed per usual Medicare fee-for-service but could share in gains arising from better care coordination.
Now more critical than ever, development and strengthening of physician hospital organizations (PHOs) and especially Accountable Care Organizations (ACOs) will be central to the CMS initiative. Since bundling involves sharing in multiple ways, physicians and especially surgeons will need to work energetically with other members of the care team on matters ranging from governance to database perfection to fair quantitation and monitoring of disbursements to team members for each episode of care.
For surgeons in general and many vascular surgeons, it will be important to continue mending fences with the forces of integration and organizational innovation in our communities. Changes such as the electronic medical record, e-prescribing and membership in the local PHO or ACO will keep us “in the loop”. Institutional participation in quality programs such as the American College’s National Surgical Quality Improvement Program (NSQIP) and the Society for Vascular Surgery’s Vascular Quality Initiative (VQI) will be increasingly important, along with ongoing support for hospital quality and safety efforts such as the Surgical Care improvement Program (SCIP) and enhanced use of the surgical checklist.
At heart, most physicians and surgeons know that we need significant change in our system. The CMS proposal looks like a step in the right direction. It is hoped that many of our institutions will respond to the RFA and participate in designing and testing plans under one of the four proposed models. This project cannot succeed without the wisdom and full involvement of physicians and surgeons.
This program should result in multiple benefits to everyone. By identifying and reducing frontline costs incurred by surgeons, physicians, and other providers, costs to the entire system are eliminated rather than simply shifted to another part of the system. We should applaud this kind of incisive "surgical strike" and help CMS identify other similar opportunities.
Dr. Magruder C. Donaldson is the chairman of surgery at Metrowest Medical Center in Framingham, Mass. He is also an associate medical editor of Vascular Specialist.
This following is the complete text of Dr. Donaldson's comments, which were abbreviated in print.
| Dr. Craig Donaldson |
The rationale for bundled payments is not only to reduce health care expenditures by removing the piece work, volume driven reimbursement system vulnerable to duplication, waste and fraud. More importantly, bundling should stimulate better organization, teamwork and coordination of services resulting in better care quality and outcomes.
Preventive measures and multidisciplinary disease-oriented programs should be strengthened. Evidence is strong that bundling will work, sufficient to convince the Centers for Medicare & Medicaid Services (CMS) to initiate a Request for Applications (RFA) on August 23 for providers to test and develop four models for bundling. The RFA can be viewed at www.innovations.cms.gov for more detail.
The four models focus on selected “episodes of care”, providing a negotiated bundled price for each episode. Unlike managed care which bases reimbursement on “covered lives”, payment for an episode of care such as a femoropopliteal bypass would bundle services for the episode, including inpatient, post-acute care rehabilitation, lab work and other services and related readmissions over a defined interval of time, depending on the model.
The four models include three retrospective plans and one prospective plan.
Under the retrospective plans (Models 1-3) CMS and the applicant provider set a target price for a defined episode of care by applying a discount to total costs for a similar episode of care based upon historical data. Payments would be made under the core Medicare system (not including Medicare Advantage plans) at the negotiated discount. At the end of the episode, total payments would be compared with the target price. Participating providers could then be able to share in any savings.
Under the prospective plan (Model 4) a single negotiated bundled payment for inpatient care would be made to the hospital for the episode, from which practitioners would be paid by the hospital.
The fundamental goal is alignment of incentives to create more efficient, better organized care. Disease prevention and improved care quality will result, with cost savings a byproduct. The fact that CMS will share any savings gained through the retrospective plans indicates which priority is their first.
All of the models will require strong leadership and cooperation among caregivers, most importantly hospitals and physicians. Integrated systems with employed physicians and surgeons would be more likely to apply for prospective bundling under Model 4. Less centralized systems would more likely choose Model 1 in which hospitals are paid a negotiated bundled and discounted price and physicians would be reimbursed per usual Medicare fee-for-service but could share in gains arising from better care coordination.
Now more critical than ever, development and strengthening of physician hospital organizations (PHOs) and especially Accountable Care Organizations (ACOs) will be central to the CMS initiative. Since bundling involves sharing in multiple ways, physicians and especially surgeons will need to work energetically with other members of the care team on matters ranging from governance to database perfection to fair quantitation and monitoring of disbursements to team members for each episode of care.
For surgeons in general and many vascular surgeons, it will be important to continue mending fences with the forces of integration and organizational innovation in our communities. Changes such as the electronic medical record, e-prescribing and membership in the local PHO or ACO will keep us “in the loop”. Institutional participation in quality programs such as the American College’s National Surgical Quality Improvement Program (NSQIP) and the Society for Vascular Surgery’s Vascular Quality Initiative (VQI) will be increasingly important, along with ongoing support for hospital quality and safety efforts such as the Surgical Care improvement Program (SCIP) and enhanced use of the surgical checklist.
At heart, most physicians and surgeons know that we need significant change in our system. The CMS proposal looks like a step in the right direction. It is hoped that many of our institutions will respond to the RFA and participate in designing and testing plans under one of the four proposed models. This project cannot succeed without the wisdom and full involvement of physicians and surgeons.
Officials at the Centers for Medicare and Medicaid Services in August released a request for applications (RFA) inviting physicians, hospitals, and other health care providers to participate in the Bundled Payments for Care Improvement initiative. The program, which was mandated under the Affordable Care Act, offers options for bundling payments for a hospital stay, for post-discharge services, or for both the hospital stay and the post-discharge care.
Instead of paying hospitals, physicians, and other providers separately, this initiative would combine the payment over an episode of care for a specific condition. The aim of the program is to encourage clinicians to work together and provide better continuity of care, resulting in better quality and lower costs.
"Today, Medicare pays for care the wrong way," Health and Human Services Secretary Kathleen Sebelius said during a teleconference to announce the bundling program. "Payments are based on the quantity of care, the amount of services delivered, not the quality of that care. And that leaves us too often with a system that actually can punish the providers that are most successful at getting and keeping their patients healthy."
The new bundling program offers three ways for health care providers to receive payment retrospectively, and one way to receive a prospective payment. Under some of the retrospective payment models, CMS and the providers would agree on a target payment amount for the episode of care and providers would be paid under the original Medicare fee-for-service system, but at a negotiated discount of 2% to 3% or greater. At the end of the care episode, the total payment would be compared with the target price and providers would be able to share in the savings, according to CMS.
Under prospective payment model, CMS would make a single bundled payment to the hospital to cover all services provided during the inpatient stay by the hospital, physicians, and other providers. That payment would offer at least a 3% discount to Medicare. Under this option, physicians and other providers would submit "no pay" claims to Medicare and the hospital would pay them out of the single bundled payment.
In addition to the options of prospective or retrospective payment, providers could choose how long the episode of care will be and what conditions they want to bundle payment for, and what services would be included in the payment. CMS officials said they wanted to make the program flexible so that a range of hospitals, physicians, and other providers could participate.
The American College of Surgeons General Surgery Coding and Reimbursement Committee (GSCRC) has been actively studying how bundled payments could be applied in surgery. The ACS believes that critical to the success of any bundling initiative is ensuring that the bundle is clinically coherent. The ACS GSCRC will continue this work and their discussions with the administration, CMS, and other stakeholders to ensure that any possible bundled payments in surgery will improve patient care.
Organizations interested in applying must submit a letter of intent by Sept. 22 for Model 1 and by Nov. 4 for Models 2, 3, and 4. More information on the program and how to apply is available at www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.
Dr. Richard Gilfillan, the acting director of the CMS Innovation Center, which is overseeing the bundling initiative, said he expects that hundreds of organizations will apply. The program is a unique opportunity for hospitals to redesign their systems to promote better care coordination, Dr. Gilfillan said, and have that effort supported through Medicare payments.
The idea is to eliminate the traditional barriers between physicians and other providers – both inpatient and outpatient – all of whom may be involved in the care of a single condition, said Dr. Nancy Nielson, senior advisor to the CMS Innovation Center and past president of the American Medical Association.
The AMA was still reviewing the bundled payment details at press time, but Dr. Cecil B. Wilson, AMA immediate past president, said the organization will urge federal officials to encourage applications for physician-led bundling projects. "For this to be successful, and for physicians to participate actively, then they need to be a part of that process rather than just some larger corporation or larger hospital system or health plan that’s organizing these," he said. "We think those are important as well, but we also think it’s important that physicians be a part of that leadership."
Health care consultant Robert Minkin urged physicians to seriously consider applying for the bundling program. The program is a sentinel event in the move from fee for service to more centralized, coordinated care model, he said.
Officials at the Centers for Medicare and Medicaid Services in August released a request for applications (RFA) inviting physicians, hospitals, and other health care providers to participate in the Bundled Payments for Care Improvement initiative. The program, which was mandated under the Affordable Care Act, offers options for bundling payments for a hospital stay, for post-discharge services, or for both the hospital stay and the post-discharge care.
Instead of paying hospitals, physicians, and other providers separately, this initiative would combine the payment over an episode of care for a specific condition. The aim of the program is to encourage clinicians to work together and provide better continuity of care, resulting in better quality and lower costs.
"Today, Medicare pays for care the wrong way," Health and Human Services Secretary Kathleen Sebelius said during a teleconference to announce the bundling program. "Payments are based on the quantity of care, the amount of services delivered, not the quality of that care. And that leaves us too often with a system that actually can punish the providers that are most successful at getting and keeping their patients healthy."
The new bundling program offers three ways for health care providers to receive payment retrospectively, and one way to receive a prospective payment. Under some of the retrospective payment models, CMS and the providers would agree on a target payment amount for the episode of care and providers would be paid under the original Medicare fee-for-service system, but at a negotiated discount of 2% to 3% or greater. At the end of the care episode, the total payment would be compared with the target price and providers would be able to share in the savings, according to CMS.
Under prospective payment model, CMS would make a single bundled payment to the hospital to cover all services provided during the inpatient stay by the hospital, physicians, and other providers. That payment would offer at least a 3% discount to Medicare. Under this option, physicians and other providers would submit "no pay" claims to Medicare and the hospital would pay them out of the single bundled payment.
In addition to the options of prospective or retrospective payment, providers could choose how long the episode of care will be and what conditions they want to bundle payment for, and what services would be included in the payment. CMS officials said they wanted to make the program flexible so that a range of hospitals, physicians, and other providers could participate.
The American College of Surgeons General Surgery Coding and Reimbursement Committee (GSCRC) has been actively studying how bundled payments could be applied in surgery. The ACS believes that critical to the success of any bundling initiative is ensuring that the bundle is clinically coherent. The ACS GSCRC will continue this work and their discussions with the administration, CMS, and other stakeholders to ensure that any possible bundled payments in surgery will improve patient care.
Organizations interested in applying must submit a letter of intent by Sept. 22 for Model 1 and by Nov. 4 for Models 2, 3, and 4. More information on the program and how to apply is available at www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.
Dr. Richard Gilfillan, the acting director of the CMS Innovation Center, which is overseeing the bundling initiative, said he expects that hundreds of organizations will apply. The program is a unique opportunity for hospitals to redesign their systems to promote better care coordination, Dr. Gilfillan said, and have that effort supported through Medicare payments.
The idea is to eliminate the traditional barriers between physicians and other providers – both inpatient and outpatient – all of whom may be involved in the care of a single condition, said Dr. Nancy Nielson, senior advisor to the CMS Innovation Center and past president of the American Medical Association.
The AMA was still reviewing the bundled payment details at press time, but Dr. Cecil B. Wilson, AMA immediate past president, said the organization will urge federal officials to encourage applications for physician-led bundling projects. "For this to be successful, and for physicians to participate actively, then they need to be a part of that process rather than just some larger corporation or larger hospital system or health plan that’s organizing these," he said. "We think those are important as well, but we also think it’s important that physicians be a part of that leadership."
Health care consultant Robert Minkin urged physicians to seriously consider applying for the bundling program. The program is a sentinel event in the move from fee for service to more centralized, coordinated care model, he said.