One of the largest changes promised by the Affordable Care Act — how doctors and hospitals are reimbursed — is now being put into practice.
The Centers for Medicare and Medicaid Services announced Thursday that 500 providers around the country were selected to participate in four different bundled payment demonstration programs. In New Jersey, 56 participating facilities are working on four different bundled payment demonstrations, including 29 of the 32 national participants in the so-called model one program.
Bundled payments means a lead organization accepts one lump payment from CMS for an episode of care — like a knee replacement or a heart catheterization — and then distributes that payment among the providers who participated in that episode. The demonstration hopes to prove that, when providers are not paid for every individual service rendered, care is improved and costs are decreased.
Bundled payments are intended to encourage providers to work together, from the primary-care physician to the hospitalists to the physical therapists, to reduce unnecessary tests and improve efficiency.
Bundle model one, which is being overseen by the New Jersey Hospital Association, is reserved for acute-care stays for Medicare patients. Beginning in 2009, 12 hospitals have been involved in a demonstration through the NJHA to see if sharing savings with physicians is a viable financial model. That demonstration became a model for the bundled payment programs, and is being expanded through model one.
Dr. Mitchell Rubenstein, vice president of medical affairs at The Valley Health System, said model one carries many of the same program characteristics of the gain sharing program, but hospitals have to pay Medicare a fee to participate.
"The gain-sharing philosophy makes hospitals and physicians partners in identifying more efficient ways to deliver quality health care," said Sean Hopkins, NJHA's senior vice president of health economics, in a statement.
Cooper University Hospital, in Camden, is one of the 29 bundle one participants, and CEO John Sheridan said in a statement that the demonstration "provides a field tested model that creates an incentive to enhance care and reduce costs. It's a great addition to our portfolio of our accountable care initiatives."
Model one participants will begin the bundled payment program in April, with another round of applicants for a 2014 start date to be opened later this year.
Bundle model two includes both acute care and rehab care, and 14 New Jersey hospitals are participating. Rubenstein said model two is like an accountable care organization, where care is coordinated between providers, but for individual episodes for 30, 60 or 90 days after discharge.
A hospital can participate in both models one and two, but any episodes selected for model two cannot be used for model one data or reimbursement. Hospitals must also pay a fee to participate.
Bundle three is post-acute care only, and like models one and two, is paid after the episode of care is delivered. Most participants are home health organizations, like Bayada Home Health Care Inc. and the VNA Health Group.
Unlike the other three models, bundle four is paid prospectively. The New Jersey participants, Jersey Shore University Medical Center and Shore Memorial Hospital, have each selected one episode to get paid for upfront, and then distribute to the providers involved.
Hospital executives have been gearing up for bundled payments by trying to figure out the exact cost for an episode of care.