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CMS Bundled Payment Models Cut $864 for Orthopedic Care Episode

CMS has incorporated bundled payment models to be used for patients with heart attacks and in need of hip fracture surgery and heart bypass surgery.

By Vera Gruessner

Yesterday, the Centers for Medicare & Medicaid Services (CMS) released a report encompassing the second annual evaluation of the Bundled Payments for Care Improvement initiative, according to The CMS Blog. This summer, a new proposal was made for creating bundled payment models that would ensure Medicare payments would be in the form of value-based care.

Bundled Payments for Care Improvement

Providers participating in bundled payment models are financially incentivized to offer better patient care while reducing cost. The Bundled Payments for Care Improvement initiative consists of using episode-based care among patients with heart attacks and those in need of hip fracture surgery and heart bypass surgery.

The evaluation report outlines the type of participants taking part in these bundled payment models and the overall results from the Bundled Payments for Care Improvement program. Out of 15 clinical episode groups, 11 had shown savings for the Medicare program. Additionally, Model 2 hospitals had saved an average of $864 per episode of care for orthopedic surgery. The results for orthopedic surgery also outline improved quality of care based on beneficiary surveys.

Ninety days after hospital discharge, patients also reported better improvement in two measures of mobility. Another important finding shows that, for cardiovascular care, bundled payment models did not actually lead to cost savings or clear improvements in the quality of care.

The CMS report evaluating the program states that orthopedic surgeries dominated the 48 total clinical episode groups. While providers have taken on this challenge wholeheartedly in order to be fairly reimbursed, few significant differences in quality of treatment have been found due to the short time the program has been operating.

READ MORE: CMS Issues Bundled Payment Models for Cardiac, Orthopedic Care

“Average Medicare payments for the anchor hospitalization and the 90-day post-discharge period (PDP) were estimated to have declined $864 (3 percent) more for orthopedic surgery episodes initiated at BPCI hospitals than for orthopedic surgery episodes initiated at comparison hospitals. The larger reduction in Medicare payments for the BPCI population was primarily due to reduced payments for institutional PAC,” the report stated.

Out of all the participating providers, few (16.8 percent) had experience with operating bundled payment models while 67 percent had managed pay for performance contracts and 48 percent had conducted shared savings reimbursement systems.

Dr. Patrick Conway, CMS Acting Principal Deputy Administrator and Chief Medical Officer, wrote in The CMS Blog that bundled payment models are meant to reward providers for preventing complications and hospital readmissions while decreasing the time it takes for patients to recover. These new bundled payment models expand into other clinical areas, coming soon after the implementation of the Comprehensive Care for Joint Replacement Model, which provides a value-based care reimbursement system for Medicare beneficiaries receiving hip and knee replacement surgery.

Bundled payment models are looked toward as an example of better care coordination, as these healthcare reimbursement systems incentivize providers to work together during a hospital admission and after discharge to ensure a patient’s recovery goes smoothly. Conway further recommends bundled payment models for reducing preventable complications among hospitals and clinics.

CMS will be releasing more information regarding the results of these bundled payment models throughout the next year, according to Conway. Using bundled payments will be a key measure for tying 50 percent of Medicare payments to alternative payment models by 2018, which is a major goal that CMS established.

READ MORE: Bundled Payment Model Attracts More Oncologists than Expected

With the goal of tying 30 percent of Medicare reimbursement to alternative payment models already met ahead of schedule, Conway hopes that the agency’s momentum will continue.

Bundled payments may be useful in some arenas such as orthopedic surgery, but may not work in all clinical segments of care. For instance, research from the from the Harvey L. Neiman Health Policy Institute shows that bundled payments may align well with mammography services, but some skilled nursing facilities have struggled with bundled payments, according to Fitch Ratings.

“Aside from serving as a model to demonstrate how diagnostic radiologists can participate in bundled payment models, this research initiative has the potential to fundamentally change the way mammography is paid for in this country. Because screening bundles include costs for follow-up diagnostic imaging in addition to the initial screening mammogram, patient adherence to screening guidelines may improve – which may have profound effects on public health in a way that’s great for patients, providers and payers,” Danny R. Hughes, PhD, Neiman Institute Senior Director for Health Policy Research and Senior Research Fellow, stated in a press release.

Since the Bundled Payments for Care Improvement initiative is still in its early stages, it will take more time to see the full results of this endeavour.


READ MORE: Why Healthcare Bundled Payment Models May Expand in 2017


Dig Deeper:

How to Overcome the Challenges of Bundled Payment Models

How Payers Should Prepare for Value-Based Reimbursement


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