How Will Bundled Payments for Care Improvement Affect Physician Compensation?

     On August 22, 2011, The Center for Medicare and Medicaid Services (CMS) innovation arm launched the “Bundled Payments for Care Improvement” program. This program outlines four different bundled payment models which provide an opportunity for providers to implement bundled payment systems which would also help control CMS’ costs.

     Trends like these will most certainly affect physician compensation models in the future. The CMS has launched a pilot program around paying hospitals, physicians and other providers a bundled payment for a diagnosis-related group (DRG) or DRGs and/or all associated post-acute care. This allows hospitals to gainshare cost savings generated through this initiative, providing a direct, meaningful incentive that hospitals have not traditionally been able to offer.

     Three of the initiatives would involve a retrospective bundled payment arrangement, with a target payment amount for a defined episode of care while the fourth initiative would be paid prospectively. The Bundled Payments Initiative would allow CMS to link payments for multiple services patients receive during a single episode of care, allowing more efficient delivery of health care and improvement in quality of care.

     Our clients with strong medical staffs and executive leadership are more likely to be successful with bundling efforts. Anyone interested in bundling would have filed a letter of intent to participate by March 2012 if inclined to do so.

     Please keep this in mind as you discuss compensation offers in the future. Below is a summary of the four initiatives offered:

     Model 1 defines an episode of care as the inpatient stay in the general acute care hospital.

     Model 2 defines an episode of care to include the inpatient stay and post-acute care and would end either a minimum of 30 or 90 days after discharge.

     Model 3 says the episode of care begins at initiation of post-acute care with a participating Skilled Nursing Facility, Inpatient Rehabilitation Facility, Long-Term Care Hospital or Home Health Agency within 30 days of discharge from the inpatient stay and would end no sooner than 30 days after the initiation of the episode.

     Model 4 entails CMS making a single prospectively determined bundled payment to the hospital that would encompass all services rendered during the inpatient stay by the physicians, hospital, and other practitioners.
______________________________________________________
David Curtis is Executive Vice President of Business Development at Fidelis Partners.
Connect with David:
LinkedIn
Email