Bundled payments are here; what do they mean?


CMS officials just announced a bunch of payment reforms in recent weeks—including the 'Comprehensive Care for Joint Replacement Model.' There has been talk for a while and remember the Bundled Payments for Care Improvement Initiative last year but what is different is : the proposal to make bundled payments mandatory for hospitals, doctors, and other providers in at least 75 locations.

Also remember the ACO participation for now is voluntary. See where this is headed? There is precedent of course like the Hospital Value-Based Purchasing Program, Medicare's readmissions penalties and with the new SGR law, which mandates value-based payment changes. There have also been ‘demonstration projects’ like CABG demonstration in the 1990s and the ACE program. But, there is a difference between the ACO payments and bundled payment model. The former entails providers waiting till later to see if cost savings can be achieved with ACOs wheras in bundled payments, CMS gets to discount the price at the very start. So, om $7 B spent by Medicare on THR and TKR replacements in 2013, the prices are adjusted prospectively and savings realized at the start.

CMS recently announced  tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.

So, who gets to decide what physicians get paid as part of the ‘bundle?”

You really want an answer!