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Hundreds of organizations on board to test new bundled payment initiative


More than 500 organizations have signed on to participate in the Centers for Medicare and Medicaid Services’ Bundled Payments and Care Improvement initiative, which will test whether bundling payments can result in better coordinated care and lower Medicare costs.

More than 500 organizations have signed on to participate in the Centers for Medicare and Medicaid Services’ (CMS') Bundled Payments and Care Improvement initiative, which will test whether bundling payments can result in better coordinated care and lower Medicare costs.

“The objective of this initiative is to improve the quality of healthcare delivery for Medicare beneficiaries, while reducing program expenditures, by aligning the financial incentives of all providers,” says Acting CMS Administrator Marilyn Tavenner.

The initiative will test four bundling methods that vary depending on the type of healthcare provider and what services are provided in the bundle. CMS then will bundle payments for services provided to beneficiaries during an “episode of care.” Providers who participate in the initiative agree to provide CMS a discount from expected payments for the episode of care, with provider partners working to reduce readmissions, duplicate care, and complications for lower overall health costs, CMS says.

CMS has selected a group of 32 organizations to begin testing bundled payments in Model 1, for acute care hospital stays, beginning in April. Another group that will start bundled payments in early 2014 will be announced in the next few weeks. CMS also plans to launch the first phase of the second, third, and fourth bundled payment models before July. More than 100 participants will partner with more than 400 provider organizations to learn how to improve care using CMS data on care patterns.

Jeremy A. Lazarus, MD, president of the American Medical Association, says, “We are pleased the initiative provides flexibility and a range of models for the selected participants. The AMA was an early supporter of pilots for bundling Medicare payments. We believe this initiative, in conjunction with other new models for delivering care to Medicare patients, presents an opportunity to improve the quality of care and reduce costs."

Lazarus encourages CMS to include physicians in a variety of practice types in the bundled payment program pilots. All of the four existing models involve inpatient hospital stays, he added.

Patients aren't necessarily concerned with how physicians are paid, but in a recent poll of 1,000 consumers by Booz and Co., 78% of respondents said that the concept of bundling care appealed to them. Sixty-four percent, however, said they would not change from their existing primary care physician (PCP) or choose one based on bundle availability. PCPs were the physicains who enjoyed the greatest loyalty from patients.

Other poll findings:

  • Input into the care process, coordinated care, and warranties as the most appealing are the top three benefits of bundled care, according to more than 50% of respondents.

  • 30% of participants said that bundled offerings from physicians, hospitals, and employers were more attractive than those offered by retail stores, online insurance aggregators, or brokers.
  • 45% of respondents indicated that they are increasingly willing to switch specialists, and 50% said they are increasingly willing to change hospitals, for bundles that represent a savings of at least 10% over their existing coverage.

  • 74% of respondents said they would be willing to commute within their own city but no further to receive bundled care. Rural residents were much more willing to travel regionally than were urban and suburban residents.

  • Consumers aged 31 to 49 were most likely to find bundles appealing (86%).

  • 80% of participants said they would prefer bundled coverage across all settings in the care continuum, from initial physician consultation to post-acute care and rehab.

“Recent healthcare policy changes, an increasingly integrated [information technology] infrastructure, and the affirmation of the Affordable Care Act are enabling insurers and providers to share data, share risk, and get patients to take more responsibility for their own care," said Minoo Javanmardian, a partner in Booz & Co.'s North American health practice. "All these things are critical to transforming care delivery.”

Booz & Co. noted that perhaps the strongest indicator that bundled care will be a core part of the future healthcare system is the support it is receiving from private employers such as Walmart, Lowe’s, and Boeing. Walmart soon will partner with providers to offer bundled care for several common procedures.

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