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Centers for Medicare & Medicaid Services (CMS) Announces Participants in Bundled Payments for Care Improvement Initiative

The Centers for Medicare & Medicaid Services (CMS) recently announced that over 500 organizations will begin participating in the Bundled Payments for Care Improvement initiative. The large number of participating organizations now exceeds the number of Medicare ACOs, and makes the Bundled Payments initiative the largest voluntary Medicare payment innovation program. Participating organizations are located throughout the United States, and are displayed on CMS’s website.

The Bundled Payments initiative is comprised of four “models of care”, under which Medicare will bundle payments for multiple services that beneficiaries receive during an episode of care. Under the traditional model, Medicare makes separate payments to providers for each of the individual services they furnish to beneficiaries, which rewards the quantity of services offered by providers rather than the quality of care furnished.

Model 1 focuses on episodes of care relating to inpatient stays in the acute care hospital, based on discounted IPPS payment rates.

Model 2 focuses on episodes of care including the inpatient stay and also post-acute care ending either 30, 60, or 90 days after hospital discharge. Episodes of care under Model 3 begin at the initiation of post-acute care, and do not include the inpatient hospital stay. Under Models 2 and 3, participants set a target price for the bundled payment based on discounted Medicare FFS rates. During the episode of care, the participant continues to be paid on a fee-for-service basis. After the episode of care, Medicare compares the total amount of payments made by CMS to the participant to the target price; any amounts exceeding the target price must be repaid to CMS, and any savings may be distributed by the participant to providers.

Finally, Model 4 relates only to inpatient stays in the acute care setting, but payment is made on a prospective basis, and readmissions within 30 days after hospital discharge will be included in the original bundled payment. Participants proposed a target price and CMS will make a single, prospective payment equal to such target price at the beginning of each episode of care.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.


About this Author

Eric Klein, Legal Specialist, Sheppard Mullin, national healthcare practice

Eric Klein leads the 95 attorney national healthcare practice, and is a partner in the Century City office, of Sheppard Mullin Richter & Hampton LLP, a full service AmLaw Global 100 law firm with offices throughout California, New York, Chicago, Washington, D.C., London, Brussels, Beijing, Seoul and Shanghai. With over thirty years of practical legal and business experience, his practice focuses on the healthcare, technology and related industries. Known in the business community for his creative solutions and deal-making ability, Eric uses deep industry knowledge, entrepreneurial...

Kenneth Yood Healthcare Attorney SheppardMullin

Ken is a partner in the Corporate practice group in the firm's Los Angeles office. Chambers USAranks him highly for Healthcare, where he was commended for his "broad-based ability in the regulatory area." Clients appreciate that "his explanations are clear, and he understands the business side of things," notes Chambers 2016.

Areas of Practice

Ken represents a wide range of healthcare providers and healthcare companies, including specialty and general acute hospitals (including local district, nonprofit and for-profit facilities), home health agencies, pharmaceutical vendors, nursing facilities, and health information and management providers.

Ken has experience in Medicare and Medicaid reimbursement and certification, state licensing, and federal regulatory compliance.

Additionally, he counsels clients on physician referral law limitations, state and federal fraud and abuse issues, and state and federal false claims and program fraud matters.

Ken helps clients both establish and operate healthcare compliance programs. He has developed corporate compliance programs designed to identify Medicare and Medicaid reimbursement and certification issues, licensing and federal regulatory compliance matters, fraud and abuse issues, as well other regulatory compliance matters. He has assisted clients in both internal and external investigations of healthcare facilities and has experience in advising clients on disclosure and reporting obligations and strategies under the various federal and state false claims laws.

Aytan Dahukey, Sheppard Mullin, Health Care Lawyer, Finance Attorney

Aytan Dahukey is a partner in the Corporate Practice Group in the firm's Century City Office and is a member of the firm's Healthcare, Emerging Growth/Venture Capital and Private Equity Industry Teams. As an active member of these industry teams, Aytan enjoys a wide-ranging practice that spans across several sectors.

Aytan’s healthcare practice focuses on public and private mergers and acquisitions and general corporate counsel representing a wide variety of healthcare-related clients in California and nationally. His clients include independent...

Lynsey Mitchel, Attorney, Sheppard Mullin, Corporate Practice

Lynsey Mitchel is an associate in the Corporate Practice Group in the firm's Century City office and is a member of the firm's healthcare practice team.

Areas of Practice

Lynsey represents hospitals, managed care organizations, medical groups, pharmacies, home health providers, medical device retailers and other health care entities and providers. 

Lynsey has deep expertise in HMO regulatory matters and has assisted numerous clients to obtain HMO licensure as health care service plans under California’s Knox-Keene Health Care Service Plan Act. Lynsey...