The Centers for Medicare & Medicaid Services (CMS) is about to try four different strategies for bundling provider payments.

CMS is organizing the Bundled Payments for Care Improvement testing program to implement Section 3021 of the Patient Protection and Affordable Care Act of 2010.

PPACA Section 3021 requires CMS to try to hold down the cost of care by experimenting with new strategies for paying for care.

Section drafters wrote the section because of concerns that one reason for the high cost of the U.S. acute health care system may be the typical fee-for-service approach to paying for care, especially at the traditional Medicare program.

Today, officials say, Medicare providers get paid for each service provided, no matter what the outcome is.

CMS officials want to come up with a system for paying a provider based on care for a single episode of care, such as treating a ruptured appendix or a heart attack, in an effort to encourage the provider to provide the same level of care as efficiently as possible.

CMS officials report that earlier bundled care pilot programs seemed to cut the cost of care about 5% to 10%.

The four models to be tested in 2012 are:

  • Model 1: “Hospital services provided to a beneficiary during an acute inpatient stay, where physicians are partners in improving care.”
  • Model 2: “Hospital, physician, post-acute provider, and other Medicare-covered services provided during the inpatient stay as well as during recovery after discharge to the home or another care setting.”
  • Model 3: “Hospital, physician, post-acute provider, and other Medicare-covered services beginning with the initiation of post-acute care services after discharge from an acute inpatient stay.”
  • Model 4: “Prospective Payment Bundling… CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. Physicians and other practitioners would submit ‘no-pay’ claims to Medicare and would be paid by the hospital out of the bundled payment.”

Providers that want to help test Model 1 must submit letters of intent to participate by Sept. 22.

Letters of intent for the other models are due Nov. 4.

CMS is giving providers that want to try models 2, 3 and 4 more time because they must provide historical Medicare claims data, officials say.

Private health plans and health insurers will not participate in the bundled payments program, but policymakers are hoping that, if CMS comes up with any successful strategies for holding down costs, other payers will follow suit.

Other provider reimbursement coverage from National Underwriter Life & Health: