On July 18, the Center for American Progress issued a report sponsored by CMS entitled “Bundling” Payment for Episodes of Hospital Care (CAP Report), which contained recommendations for bundled payment pilot programs to be initiated by CMS in the near future.  The Patient Protection and Affordable Care Act (PPACA) mandated that, by 2013, CMS create a program that would bundle payment for hospital services and other post-acute care services that were provided as part of the same episode of illness.  It is anticipated that the initial pilot programs will focus on acute, rather than chronic, care and will involve retrospective, rather than prospective, payment.

Nancy-Ann DeParle, the White House Deputy Chief of Staff, was present at the release of the CAP Report and stated that providers could begin implementing models described in the CAP Report before the end of this year.

The CAP Report includes the following recommendations, among others:

  • Pilots should have “clear conditions for participation and clear standards for performance,” but leave flexibility for providers to adapt their own “operational details.”
  • Pilots should strive for “extensive…participation” by providers, be time-limited, and if possible, involve the participation of private insurers.
  • Pilots should target medical conditions or diagnoses that are high volume, subject to “substantial variation in treatment patterns and expenditures” and for which there exist well-established, evidence-based interventions. •Pilots should offer payment designs that incorporate both single bundled payments to a single coordinating provider and alternative designs.
  • To ensure broad participation, pilots should begin using existing Medicare DRG rates and constrain rate growth in subsequent years to achieve savings.
  • Pilot payments should be tied to quality performance.
  • Patients should be informed of a provider’s participation in a bundled payments program and be allowed the freedom to seek non-participating providers without financial penalty.

Though not certain, it is likely that CMS’s design of the pilot program(s) will be consistent with the recommendations of the CAP Report.

The report and video of Ms. DeParle’s remarks can be found here.