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CMS Trials Bundled Payments for Episodes of Care

Cheryl Clark, for HealthLeaders Media, August 24, 2011

Medicare officials on Tuesday proposed yet another care payment structure, and this one has hospitals and physicians receiving bundled payments for specific episodes of patient illness that extend well after the patient leaves an acute care setting.

"Instead of paying for each care separately, CMS (the Centers for Medicare & Medicaid Services) will provide one lump payment to providers for an episode of care," Secretary of Health and Human Services Kathleen Sebelius said during a news briefing.

"For example, a hospital could get a single bundled payment for treating a heart attack that includes the hospital stay and any procedures, as well as rehabilitation during recovery," she said. "That gives the hospital the incentive to make sure the patient gets the right care, not just while he or she is in the hospital but also after they leave the hospital, whether it's taking the right medications or eating the right diet or getting the right wound care."


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"And if the hospital keeps the patient healthy and limits the amount of extra care they need, they come out ahead," Sebelius said.

This formal bundled payment mechanism stems from numerous and successful demonstration projects at a number of large hospital systems around the country. It was specifically called for in the Patient Protection and Affordable Care Act.

According to an HHS statement, a current Medicare heart bypass surgery bundled payment demonstration saved $42.3 million, or 10% of expected costs, and saved patients $7.9 million in co-insurance. Care was improved and hospital mortality was reduced, federal officials said.

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