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HHS Formally Launches "Bundled Payments for Care Improvement Initiative" under Medicare

August 23, 2011
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Healthcare reform-driven program adds yet another venue for reimbursement change

On August 23, the U.S. Department of Health and Human Services (HHS) announced the launch of the “Bundled Payments for Care Improvement Initiative,” which will align payments for services delivered across an episode of care, such as cardiac bypass or hip replacement, rather than paying for each element of that episode of care separately, as is now the norm.

“Patients don’t get care from just one person—it takes a team, and this initiative will help ensure the team is working together,” HHS Secretary Kathleen Sebelius said, in announcing the launch of the initiative, which was authorized as part of the federal Affordable Care Act, the healthcare reform legislation passed by Congress and signed into law by President Obama in March 2010.

Secretary Sebelius’ support for the new initiative was echoed in a statement by Donald Berwick, M.D., Administrator of the federal Centers for Medicare and Medicaid Services (CMS), who said, “All around the country, many of the leading healthcare institutions have already implemented these kinds of projects and seen positive results.”

The news release announcing the initiative’s launch noted that “The Bundled Payments initiative is based on research and previous demonstration projects that suggest this approach has tremendous potential. For example,” the release said, “a Medicare heart bypass surgery bundled payment demonstration saved the program $42.3 million, or roughly 10 percent of expected costs, and sasved patients $7.9 million in coinsurance while improving care and lowering hospital mortality.”

Patient care organizations interested in applying to the Bundled Payments for Care Improvement Initiative will need to submit a Letter of Intent (LOI) no later than September 22, 2011 for Model 1 and November 4, 2011 for Models 2, 3, and 4 under the program.

Healthcare Informatics will continue to provide coverage of developments in this area as they occur. Please continue to turn to our website and print magazine for updates and coverage.

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