3 Medicare Episode Payment Models, 1 Simple Chart

For the past several years, the Centers for Medicare and Medicaid Services (CMS) has utilized episode payment models (EPMs), also referred to as “bundled payments,” as a vehicle for driving the shift from volume to value-based reimbursement. Intended to reduce overtreatment and incentivize care coordination, bundled payments incorporate the entire patient experience from the inpatient stay to post acute care. CMS’ first bundled payment initiative was the Bundled Payments for Care Improvement (BPCI) Initiative. Awardees in Models 2, 3 and 4 of the BPCI Initiative entered the preparation phase in October 2013 and transitioned to the risk-bearing phase by September 30, 2015. As of January 2017, BPCI has 1,364 participants. 

Last year, CMS began another bundled payment initiative, the Comprehensive Care for Joint Replacement (CJR) model, which focuses on lower extremity joint replacement (LEJR) episodes. Being that LEJR episodes already have a foothold in commercial markets, CJR is a natural fit for CMS’ first mandatory bundled payment model. Unless participating in BPCI, hospitals paid under the Inpatient Prospective Payment System (IPPS) and located in the 67 randomly selected Metropolitan Statistical Areas (MSAs) selected must participate in the CJR model.

Last month, CMS finalized a second mandatory bundled payment initiative to encompass Medicare Severity-Diagnosis Related Groups (MS-DRGs) for acute myocardial infarction (AMI), percutaneous coronary intervention (PCI), and surgical hip/femur fracture treatment (SHFFT). These episode payment models will be mandatory in the 98 selected metropolitan statistical areas beginning July 1, 2017.

For those providers committed to advancing value-based payment, CMS has proposed new pathways that will allow certain bundled payment programs to qualify as advanced Alternative Payment Models (APMs). Participation in advanced APMs allows physicians to receive a 5% payment bonus under Medicare’s Quality Payment Program. Recognition of episodic payments as an advanced model is a huge step forward in incentivizing providers to join the value-based payment journey.

Additionally, payers operating in markets where CMS is implementing EPMs should consider approaching providers with similar episode payment programs. Providers already operating in an episodic payment environment may be eager to align their commercial and government revenue streams. Additional patient volume can increase efficiency, helping providers and payers attain economically significant shared savings, bend the cost curve, and improve patient quality of care. 

CMS has advanced a number of different bundled payment programs recently. Comparing these models in a side-by-side analysis offers a useful framework for payers and providers considering, or subject to, participation. 

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CMS’ continued promotion of existing bundled payment models and development of new models is a strong endorsement of this model’s relevance in a pay-for-value world. Aver’s library includes more than 150 different episodes, giving our clients off-the-shelf access to both CMS episodes and commercial groupers like PROMETHEUS and McKinsey, and more. Clients can implement these episodes as written, modify standard definitions, or build episodes from scratch to best fit their unique circumstances. Aver’s assessment solutions provide all of the analytics necessary to identify and prioritize bundled payment opportunities, determine whether standard or custom episode definitions are the right approach, price and monitor episodes, and assess provider performance. Aver’s operational solutions platform automates payments to downstream providers and monitors workflow, payment reconciliation, and provider performance concurrent with care delivery.

Aver is excited to support participants in these other bundled payment programs with technological solutions that position them for success in a value-based payment environment. To learn more, contact us today.


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Senior Analytic Designer
Aver, Inc.

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