CMS Releases Report on Bundled Payment Initiative

WASHINGTON, D.C. (September 22, 2016)—In July, CMS proposed new bundled payment models that continue the administration’s progress to shift Medicare payments from rewarding quantity to rewarding quality by creating strong incentives for hospitals and clinicians to deliver better care to patients at a lower cost. These proposed new bundled payment models focus on heart attacks, heart bypass surgery and hip fracture surgery. They would reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions and speed recovery. This proposal follows the implementation of the Comprehensive Care for Joint Replacement Model that begin earlier this year, which introduced bundled payments for certain hip and knee replacements.

Patients want the peace of mind that comes with knowing they will receive high quality, coordinated care from the minute they are admitted to the hospital through their recovery. Bundling payments for services that patients receive across a single episode of care—such as a heart bypass surgery or hip replacement—encourages better care coordination among hospitals, doctors and other health care providers. Providers participating in bundled payments must work together when patients are in the hospital as well as after they are discharged, which should improve their recovery and avoid preventable complications and costs by keeping people healthy and at home.

Doctors, patient advocates and health care experts across the country support these models because they have seen firsthand their potential for delivering better quality and more cost-effective care. Public and private sector bundled payment models have already shown promise in improving patient outcomes while lowering costs, including for cardiac and orthopedic care. In Medicare, more than 1,400 providers are currently participating in bundles through the Bundled Payments for Care Improvement initiative. Early results are encouraging: orthopedic surgery bundles, in particular, have shown promising results on cost and quality in the first two years of the initiative. These models keep the patient at the center of care delivery and focus on well-coordinated, high quality care.

CMS released the second annual evaluation report for Models 2–4 of the Bundled Payments for Care Improvement initiative, which include both retrospective and prospective bundled payments that may or may not include the acute inpatient hospital stay for a given episode of care. This report describes the characteristics of the participants and includes quantitative results from the first year of the initiative. Future evaluation reports will have greater ability to detect changes in payment and quality due to larger sample sizes and the recent growth in participation of the initiative, which generally is not reflected in this report. Key highlights include:

• 11 out of the 15 clinical episode groups analyzed showed potential savings to Medicare. Future evaluation reports will have more data to analyze individual clinical episodes within these and additional groups
• Orthopedic surgery under Model 2 hospitals showed statistically significant savings of $864 per episode while showing improved quality as indicated by beneficiary surveys. Beneficiaries who received their care at participating hospitals indicated that they had greater improvement after 90 days post-discharge in two mobility measures than beneficiaries treated at comparison hospitals
• Cardiovascular surgery episodes under Model 2 hospitals did not show any savings yet but quality of care was preserved. During the next year, we will have significantly more data available, enabling us to better estimate effects on costs and quality.

While there is more work to be done, CMS continues to move forward to achieving the administration’s goal to have 50 percent of traditional Medicare payments tied to alternative payment models by 2018. The 2016 goal of tying 30 percent of Medicare payments to alternative payment models was met 11 months ahead of schedule, and we are committed to keeping that momentum. Bundled payments—including the ongoing Comprehensive Care for Joint Replacement Model—continue to be an integral part of transforming our health care system by creating innovative care delivery models that support hospitals, doctors and other providers in their efforts to deliver better care for patients while spending taxpayer dollars more wisely.

To view the evaluation report, click here.

Visit cms.gov for more information.

—Blog post originally written by Dr. Patrick Conway, acting principal deputy administrator and chief medical officer