Bundled Payments for Care Improvement (BPCI)

The Bundled Payments for Care Improvement (BPCI) was developed by the Center for Medicare and Medicaid Innovation (Innovation Center). The initiative is comprised of four broadly defined models of care, which link payments for the multiple services beneficiaries receive during an episode of care. Under the 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. BPCI began as a voluntary program which included a broad range of acute care hospitals, skilled nursing facilities, physician group practices, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals.

The goal of BPCI is to end fragmented care which often includes; multiple ‘episodes of care’, diminished coordination between providers and health care settings, and reimbursement by quantity instead of quality. Bundled payments are designed to help coordinate care between providers, hospitals, physicians and practitioners, and provide a higher quality of care and lower costs for Medicare beneficiaries.

BPCI Models

 In Model 1 (Preparation Period), 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.

Models 2 (risk-bearing period) and  Model 3 involve a retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care.

  • 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.
  • 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.

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.

If you need help with BPCI alternative payment models, give us a call. 866-458-6076

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