Understanding Medicare's New Bundled Payments for Care Improvement Initiative

Sunrise Senior Living  |  July 12, 2016

What are the benefits of the Bundled Payments for Care Improvement Initiative?

Usually even for a single treatment, Medicare makes separate payments. However, a new proposal called the Bundled Payments for Care Improvement initiative, created by the Center for Medicare and Medicaid Innovation, can provide fragmented care in a simplistic form across the health care setting. According to researchers at the Department of Internal Medicine at the University of Michigan, this approach encourages cost-efficiency and coordination between providers.

What is the Bundled Payments for Care Improvement Initiative?
According to the Centers for Medicare and Medicaid Services, the BPCI provides four models of care in a higher quality form at a lowered cost. It's been shown that an approach like this can be beneficial across the health care industry, streamlining work across hospitals, post-acute care providers, physicians and other practitioners. Here's a closer look at each model of care that seeks to improve the quality while lowering costs and expenses:

Understanding Each BPCI Model

1. Model 1 – Retrospective Acute Care Hospital Stay Only

In this model, care is provided to patients who require a hospital stay. A discounted amount is paid by Medicare to the hospital under the Inpatient Prospective Payment System. Physicians are paid separately through their services by Medicare under the Medicare Physician Fee Schedule.

2. Model 2 – Retrospective Acute and Post Acute Care

This plan is for patients who plan to stay in the hospital and receive post-acute care up to 30, 60 or 90 days after hospital discharge. It involves payments that are settled against a target price for a certain episode of care. Medicare pays the fee-for-service payments to suppliers furnishing services and providers. The total payment for the beneficiary is settled in a bundled payment amount by the Centers for Medicare.

3. Model 3 – Retrospective Post Acute Care Only
Model 3 triggers help by Medicare after the acute care hospital stay. It provides help at the beginning of post-acute care services by a skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. This care service has to begin within 30 days of hospital discharge and may end 30, 60 or 90 days later. 

4. Model 4 – Prospective Acute Care Hospital Stay Only

In this model, CMS makes a single bundled payment to the hospital that involves payments to the hospital, physicians and other practitioners that helped during the patient's episode of care throughout the entire hospital stay. This model allows physicians and practitioners to submit Medicare "no pay" claims and then receive payment from the hospital's bundle.

Throughout the course of the initial roll-out of the BPCI, the Centers for Medicare will work with participating hospitals, practices, physicians and practitioners to gather information and decide if these models have indeed improved the quality of care while lowering the costs and streamlining the process over different channels.