Bundled Payment

1. Bundled Payments for Care Improvement (BPCI)
CONTINUING EDUCATION COURSE
NATIONAL BUNDLED PAYMENT COLLABORATIVE
FOR MORE INFORMATION & FURTHER RESOURCES VISIT WWW.NATIONALBUNDL EDPAYMENTCOLLABORATIVE.COM

2. Why Coordinating Care & Reimbursement Matters
In 2010, President Obama passed the Patient Protection and Affordable Care Act of 2010
(PPACA). This act was in part passed to end the fee for service model of reimbursing healthcare
providers, to move to a value based care model that encouraged enhanced communication
between caregivers, reduced costs and improved quality.
PPACA mandated the creation of The Center for Medicare and MediCaid Innovation (The
Innovation Center), implemented a Hospital Readmission Penalty Program and led to the
establishment of Bundled Payments for Care Improvement (BPCI) initiatives as well.
Each of these factors increased the importance of improved transitional care for patients
frequenting acute hospitals and other inpatient and outpatient facilities.

3. Why Bundled Payments?
A Brief History of PPACA’s Initiatives
In 2010, President Obama introduced the Patient Protection and Affordable Care Act of 2010 (PPACA).
PPACA is often referred to ‘ObamaCare.” Included in the landmark legislation was a new program
titled “The Hospital Readmission Penalty Program”.
The hospital readmission program was designed to address several factors, including:
- Reducing the amount of Medicare dollars spent on avoidable re-hospitalizations
- To give acute hospitals a financial incentive to ensure proper care is delivered during hospitalization,
as well as to ensure the hospital provides and communicates to the patient and family a post acute
care plan
- To encourage communication between acute and post acute providers

4. PPACA Also Mandated The Innovation Center
The Bundled Payments for Care Improvement (BPCI) initiative was developed by the Center for
Medicare and Medicaid Innovation (Innovation Center). The Innovation Center was created by
the Affordable Care Act to test innovative payment and service delivery models that have the
potential to reduce Medicare & Medicaid spending.
In the original BPCI initiative, organizations enter into payment arrangements that include
financial and performance accountability for episodes of care. These models may lead to higher
quality and more coordinated care at a lower cost to Medicare.

5. Incentives for Creating Bundled Payment Programs?
- Lower healthcare spending
- Improved patient care
- Improved overall health
- Reduced avoidable admissions
- Improved coordination between doctors, hospitals, post acute providers and caregivers

6. Bundled Payments for Care Improvement
A bundled payment methodology involves combining the payments for physician, hospital, and
other health care provider services into a single bundled payment amount. This amount is
calculated based on the expected costs of all items and services furnished to a beneficiary
during an episode of care. Payment models that provide a single bundled payment to health
care providers can motivate health care providers to furnish services efficiently, to better
coordinate care, and to improve the quality of care.
Health care providers receiving a bundled payments may either realize a gain or loss, based on
how successfully they manage resources and total costs throughout each episode of care.

7. More on BPCI
A bundled payment also creates an incentive for providers and suppliers to coordinate and deliver care more efficiently
because a single bundled payment will often cover services furnished by various health care providers in multiple care
delivery settings.
The original BPCI Initiative introduced four separate Bundled Payment models.
The first mandatory BPCI program launched April 1, 2016 focusing on total knee and hip replacements and was
introduced in 67 markets to 465 hospitals and is known as Comprehensive Care for Joint Replacement (CJR).
Why CJR as the first mandatory program?
- Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries and can require long
recoveries making patients vulnerable to readmission unless care is coordinated.
- The variance in cost and quality between providers on hip and knee replacements was significant in fee for service

8. BPCI Advanced
Launching October 1, 2018, the first BPCI Advanced cohort included 32 clinical episodes and will
end December 31, 2023.
The second cohort will accept applications in the Spring of 2019 and begin January 21, 2020.

9. Conveners
Conveners are private, third party entities that partner with hospitals and physician groups in
bundled payment initiatives to help manage the patient episode.
Conveners are contracted to reduce the cost of the patient episode and in turn are reimbursed
through risk-sharing models, most commonly known as gain-sharing.
For example, if the reimbursement for a knee replacement was $25k for the episode and the
complete episode costs $23k after all claims were paid, if the convener and the hospital had a
50/50 split then the convener and hospital would each get $1,000 in gainsharing for that patient.

10. Who can manage a bundle?
BPCI Episode Initiators include acute care hospitals,
skilled nursing facilities, physician group practices,
home health agencies, inpatient rehabilitation
facilities, and long-term care hospitals that trigger an
episode of care.

11. Original BPCI Models
BPCI Model 2: Retrospective Acute & Post Acute Care Episode. Improvement initiative is
comprised of four broadly defined models of care, which link payments for multiple services
beneficiaries receive during an episode of care.
BPCI Model 1: The episode of care is defined as the inpatient stay in the acute care hospital.
Medicare pays the hospital a discounted amount based on the payment rates established under
the Inpatient Prospective Payment System used in the original Medicare program. Medicare
continues to pay physicians separately for their services under the Medicare Physician Fee
Schedule. The first cohort of Awardees in Model 1 began in April 2013 and concluded on March
31, 2016. The remaining Awardees concluded their participation on December 31, 2016.

12. Retrospective Models - Models 2 & 3
Models 2 and Model 3 involve a retrospective bundled payment arrangement where actual
expenditures are reconciled against a target price for an episode of care. In Model 2, the episode
includes the inpatient stay in an acute care hospital plus the post-acute care and all related
services up to 90 days after hospital discharge. In Model 3, the episode of care is triggered by an
acute care hospital stay but begins at initiation of post-acute care services with a skilled nursing
facility, inpatient rehabilitation facility, long-term care hospital or home health agency. Under
these retrospective payment models, Medicare continues to make fee-for-service (FFS)
payments; the total expenditures for the episode is later reconciled against a bundled payment
amount (the target price) determined by CMS. A payment or recoupment amount is then made
by Medicare reflecting the aggregate expenditures compared to the target price.

13. Prospective Models – Model 4
In Model 4, CMS makes a single, prospectively determined bundled payment to the hospital that
encompasses all services furnished by the hospital, physicians, and other practitioners during
the episode of care, which lasts the entire inpatient stay. Physicians and other practitioners
submit “no-pay” claims to Medicare and are paid by the hospital out of the bundled payment.
The first cohorts of Awardees in Models 2, 3, and 4 began in October 2013.

14. The BPCI Pecking Order
If a patient happened to fall into multiple bundled payment programs, the pecking order is
as follows:
- Physician
- Hospital
- Post Acute Provider

15. How Could a Patient be in Multiple Bundles?
- Patients are unaware if they are in a bundle; it’s a result of how they are assigned in the
Medicare reimbursement database
- If a patient is assigned to a physician who manages the bundle, then they are within the
physicians bundle program
- If that physician operates at a hospital that manages a bundle, then they could also be within
the hospitals BPCI program
- If that patient is then discharged form the hospital, if the nursing home is part of its own Model
3 bundle program, then the patient could also qualify for the nursing home’s BPCI program
In this scenario the patient would only be included in the doctors bundle and
the doctor would be responsible for paying the other providers.

16. Patient Safety Organizations
A PSO is a group, institution or association that improves medical care by reducing medical
errors.
Hospitals, for profit, not for profit and private entities are all eligible to become PSO’s.
PSO’s strive to create a secure environment where healthcare organizations can identify risks
and improve quality.

17. Discharge with Dignity™: The Discharge Planners NewRole - Adopt a “Home-first” Mentality
Startfromtheleftsideofguideandworkyourwaytotherightifa dischargehomeisnot anoption
TheFinancialImpactofPostAcuteReferralPatternsforhospitals,ACO’s& Bundles
Home Care /
Private Duty
Assisted
Living
Transitional
Care Visit
Chronic Care
Management
Home Health Hospice/
Palliative
SNF Acute
Rehab
LTACH
Degree of Financial
and Quality
Penalty to
Discharging
Hospital
Start Here
H
None None Negligible
(its less than 10%
of the cost of
home health –
and it covers 30
days as opposed
to 6-8 weeks for
HH)
Negligible Nominal
(should rarely be
ordered in acute OR
SNF setting; send
Dr./NP to the home
for Transitional Care
visit to assess need
for HH)
None
NA
Moderate Severe
(only for
specialized
needs that
can’t be met
at a SNF)
Severe
(LTACH is truly
specialized acute
care, not post
acute care)
Discharge Level
FO FOADH AHD ADWCD ASN LR A A
Patient Financial
Responsibility $ $$ Nominal Nominal Nominal NA 20% after 20
days
Varies Varies
A – Avoid unless specialized need; requires physician advisors approval LR – Last Resort if skilled need (if patient is unsafe to go home with resources)
FO – First Option and consideration for all patients ASN – Consider as alternative to SNF if skilled need & Home Care not an option
AHD – (Order for) All Home Discharges ADWCD – (Order for) All Discharges with Chronic Diseases
FOAHD – First Option After Discharge Home; Assisted Living can cause delays in hospital discharge; engage AL before discharge

18. Bundled Payment Resources
Three key resources for learning about, staying current and developing effective plans for
Bundled Payments include:
- www.CMS.gov (also known as Medicare Compare)
◦ Regulations
◦ BPCI, CJR and BPCI Advanced
- www.NationalBundledPaymentCollaborative.com
◦ Non for profit entity with case studies and experts on Bundled Payments & preventing Readmissions
- www.NTOCC.org
◦ The National Transitions of Care Coalition is a leading organization for updates to the value based care