In other healthcare news, the Centers for Medicare and Medicaid Services (CMS) recently announced that they will soon launch the first in a series of “bundled” Medicare payment models – a single payment system for multiple services performed by multiple providers on a single patient. Established by the Patient Protection and Affordable Care Act (PPACA), payment bundling will replace traditional fee-for-service Medicare payments with the intention of cost savings.

The first bundled payment models will focus on the entire range of medical care that is needed for specific “episodes of care”, including heart attack, stroke and diabetes. The program is voluntary and was expected to begin in 2013, but the recent announcement by White House Deputy Chief of Staff Nancy-Ann DeParle indicated that the initiative – called “Lowering Costs and Improving Quality in Health Care: Bundling as Payment Reform Innovation” – will begin “in the weeks ahead.”

Specifically, the bundling payment model will pay for episodes of care that take place in connection with a specific hospitalization, and will cover the following services: acute inpatient hospital; outpatient hospital; physician services (both inpatient and outpatient); emergency room; and post-acute services.

Ms. DeParle stated: “Right now there’s no financial incentive for providers to work together to prevent illnesses from becoming serious long-term health problems, with disastrous consequences for patients and cost containment.” The bundled payment initiative seeks to improve this situation by using the concept of shared savings among providers – similar to that of accountable care organizations (ACOs).