The Affordable Care Act (ACA) gave the Centers for Medicare and Medicaid Services (CMS) broad authority to test out new payment models that have the potential to reduce Medicare spending, as long as those models preserve or enhance the quality of care provided to beneficiaries. Sylvia Mathews Burwell, secretary for health and human services, has committed to tying 50 percent of Medicare payments to these new alternative payment models by the end of 2018.
The Center for Medicare and Medicaid Innovation (CMMI) within CMS is testing a variety of new approaches, including paying providers for episodes of care instead of for each service provided. The Bundled Payments for Care Improvement (BPCI) initiative tests four different models based on episodes of care that involve an inpatient hospital stay. One model focuses on care provided during the hospital stay, while the other three models include postacute care provided once the patient is released from the hospital. CMS hopes that by paying for related care as part of a broad payment bundle, different providers that treat a patient during a single episode will have incentives to better coordinate care, avoid unnecessary services, and improve patient health. Most of the savings are expected to come from reducing spending on physician services during the hospital stay and efficiencies in providing postacute care.
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