The traditional Medicare fee-for-service siloed payment structure promotes fragmentation in care delivery, incents duplication of services and higher costs, and fails to reward the highest quality care. Delivery system and payment reforms such as accountable care organizations represent a promising shift in how healthcare is delivered and how providers are reimbursed for their service. Another promising alternative payment model is episodic bundled payment. Representatives Diane Black (R-TN) and Richard Neal (D-MA) just introduced The Comprehensive Care Payment Innovation Act (H.R. 2502), which creates a long overdue, national, voluntary Medicare bundled payment program.
H.R. 2502 would break down the existing silos of care, align providers’ incentives, and encourage greater coordination for better patient outcomes
- Bundled payments are designed to align provider reimbursement for services delivered across an episode of care, such as a hip or knee replacement. The Comprehensive Care Payment Innovation Act would put payments for all the healthcare providers who touch a patient for that episode in the same “bundle.”
- These providers would have an option of receiving a prospective “lump sum” payment, or continue to receive fee-for-service payments, which would then be reconciled based on the providers’ historical expenditures. These payments would cover services starting three days before a patient enters a hospital and include care provided both during the hospital stay and 90 days after.
- The program begins with a minimum of six conditions: Hip/knee joint replacement; lumbar spine fusion; coronary artery bypass graft; heart valve replacement; percutaneous coronary intervention with stent; and colon resection. The legislation allows rapid expansion to other conditions.
- Physicians, hospitals, and other providers would work together and share with Medicare the savings achieved through better coordination, collaboration, and innovation among themselves and their patients across all care settings.
- Participating providers must meet quality of care outcome metrics to be able to share in the savings.
Including the hospital in the bundle assures broader collaboration and care coordination
- Including all providers in hospital-triggered episodes of care aligns post-discharge care coordination activities of hospitals with those of post-acute providers and provides the tools needed to ensure that care is delivered efficiently throughout. A combined inpatient plus post-acute care payment bundle builds on incentives already in place in the Medicare hospital payment system, including Medicare’s inpatient Value-Based Purchasing program and the Hospital Readmission Reduction Program.
- The Medicare Payment Advisory Commission (MedPAC) identified a number of advantages to bundling payments for combined hospital-post-acute care, including encouraging care coordination between providers, encouraging more efficient resource use across an episode of care, narrowing the wide variation in post-acute care spending, and improving quality of services.
H.R. 2502 would remove regulatory barriers, spur innovation, and provide certainty for providers
- In this voluntary program, organizations could sign up annually for five-year terms. As organizations learn and demonstrate success, others will want to join. This will create a cycle of constant improvement and innovation.
- R. 2502 would also create waivers necessary to carry out the program including the current requirement of a three-day inpatient stay prior to being admitted to a skilled nursing facility (SNF). This will allow patients to receive coordinated care at a less acute setting without large out-of-pocket payments for their care.
- Because it is a permanent national program, rather than a pilot program, it will provide the certainty needed to ensure significant and long-term provider investment and participation.
What’s being said?
“– a commonsense, bipartisan measure that would allow providers to bundle certain services in a manner that focuses on patient outcomes at a lower cost to taxpayers.”
– Reps. Diane Black (R-TN) and Richard E. Neal (D-MA)
“This new program would better align provider incentives with value, while promoting strong standards for the quality of care. As importantly, it would align Medicare with innovative private and public sector health plans that have already taken similar steps.” /em>
– The National Coalition on Health Care