CMS Begins Bundled Payment Projects

Citing a cataract surgery demonstration project in Dallas-Fort Worth as evidence that bundling payments reduce costs, the U.S. Centers for Medicare & Medicaid Services (CMS) invites physicians and other health care professionals to apply to help test and develop four different models for bundling payments.

CMS says both Medicare and private physicians have shown that bundling payments improves care for patients and leads to better health, better care, and lower costs. Among programs CMS cited as reducing costs was a three-year Medicare cataract surgery demonstration project started in 1993 that reduced spending by $500,000 for 7,000 procedures at sites in Dallas-Fort Worth, Cleveland, and Phoenix.

The agency seeks applications for four broadly defined models of care involving a retrospective bundled payment arrangement, while the fourth would pay providers prospectively. In three models, CMS and physicians would set a target payment amount for a defined episode of care. Medicare would pay participants under the original fee-for-service system, but at a negotiated discount. After treatment ends, Medicare would compare the total payments with the target price. Participating physicians would share in any savings. Under model 4, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians, and other practitioners. Physicians and other practitioners would submit "no-pay" claims to Medicare and would be paid by the hospital out of the bundled payment.

The deadline to submit letters of intent for the first model expires Sept. 22, and physicians have until Nov. 4 to submit letters of intent to participate in the other three models.

Action, Sept. 1, 2011