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How Will Medicare Bundled Payments Affect Your Agency & Our Industry?


4 Bundled PaymentsMandated under the Affordable Care Act, bundled payments is a major change in how the government pays for medical care. Instead of paying hospitals, physicians, and other providers separately, this initiative would combine the payment over an episode of care for a specific condition. The goal of the program is to offer clinicians’ incentives to work together and provide better quality of care, resulting in reduced costs.

Medicare Officials Announce Four Bundled Payment Programs

This notice announces a request for applications for organizations to participate in one or more of the initial four models under the Bundled Payments for Care Improvement initiative beginning in 2012.

The initiative will bundle payment across provider sites for multiple services given during an episode of care, which is a single hospital stay and/or recovery from the stay. The idea behind bundled payments is to give providers a greater incentive to coordinate care across settings, which would require advanced use of health information technologies.

The initiative follows a Medicare bundled payment demonstration program for heart bypass surgery that saved Medicare $42.3 million--about 10 percent of expected costs--and saved patients $7.9 million in co-insurance costs, and lowered mortality rates, according to CMS.

The four payment models in the Bundled Payments for Care Improvement Initiative are:

  • Model 1: An acute care hospital stay only,
  • Model 2: The acute care stay plus associated post-acute care,
  • Model 3: Just the post-acute care following discharge, and
  • Model 4: A single prospective bundled payment that would encompass all services during an inpatient stay by the hospital, physicians and other providers.

Interested organizations must submit a nonbinding letter of intent by Sept. 22, 2011, for the first model and by Nov. 4, 2011, for the other models. Medicare will provide historical claims data to prepare for models 2-4 and organizations wanting the data must file a separate research request packet and data use agreement with the letter of intent.

This bundled reimbursement initiative is just one of several different payment models about to be rolled out by CMS. Accountable Care Organizations (ACO) will begin contracting with CMS on January 1, 2012, for example. Value-based purchasing is another approach toward paying providers that is part of the ObamaCare legislation.

"Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data," according to an explanation from CMS.

Application Submission Deadlines: Applications must be received on or before October 21, 2011 for Model 1 and March 15, 2012 for Models 2 through 4.

FOR MORE INFORMATION CONTACT: for questions regarding the application process of the Bundled Payments for Care Improvement initiative.

Tell us How you Think Medicare Bundled Payments Will Affect Your Agency and Our Industry?

NAHC Op-Ed, Cut Medicare, Help Patients!


Government Cuts, 1.2 Trillion Dollars Below is the NAHC Op-Ed in response to the August 22, 2011, Op Ed in New York Times. At HEALTHCAREfirst we strive to bring you the latest industry news fast. HEALTHCAREfirst, Inc., is a provider of leading-edge home health care software and hospice software technologies.

Recent New York Times Op-Ed Underscores Congress’ Ability to Reduce Medicare Spending Through “Smart” Cuts that Help Patients, Driven by Research and Best Practices

WASHINGTON D.C. (August 24, 2011 – The National Association for Home Care & Hospice (NAHC) commended the authors of an Aug. 22 New York Times opposite editorial for their position that Congress should reduce spending by making “smart cuts” that eliminate medical tests, treatments and procedures that don’t work – or that cost significantly more than other treatments while delivering no better health outcomes.

“As the Special Committee on Deficit Reduction prepares to convene in order to pursue $1.2 trillion in cuts to government spending, we would ask them to carefully consider which programs work, and which do not,” said Val J. Halamandaris, president of NAHC. “Skilled home healthcare services save the Medicare program and taxpayers money because they allow Americans to receive high-quality, skilled nursing and therapy services at a fraction of the cost of institutional settings. There are clear and obvious ways to reduce spending within the Medicare program – several of them mentioned in the recent article – that would not only save money, but that would also protect patients from the pain, stress and risk associated with unnecessary care. ”

Continued Halamandaris, “The home healthcare community understands Congress’ charge to reduce the growth rate of health care spending. In fact, everyone who has a stake in Medicare should have a stake in helping Congress meet this important goal in a manner that is thoughtful, fiscally responsible and in the best interest of patients. NAHC and the home healthcare community are proud to be doing our part by proposing solutions that would find savings in improved efficiency and fraud detection for all providers in Medicare in part by an increased use of telehealth.”

“As the authors of the op-ed so aptly described, across-the-board cuts to Medicare, and policies that shift costs to beneficiaries, or that reduce spending in one area only to increase it in another simply will not work in the long term. We need the Special Committee to propose smart solutions that will make Medicare, and home healthcare, stronger today and for generations to come,” said Halamandaris.

The op-ed “Cut Medicare, Help Patients” appeared in the August 22 edition of the New York Times and was authored by Ezekiel J. Emanuel, an oncologist and incoming vice provost and professor of medical ethics and health policy at the University of Pennsylvania, and Jeffrey B. Liebman, a professor of public policy at Harvard. Both were White House advisers. The op-ed is viewable at

About NAHC

The National Association for Home Care & Hospice (NAHC) is a nonprofit organization that represents the nation’s 33,000 home care and hospice organizations. NAHC also advocates for the more than two million nurses, therapists, aides and other caregivers employed by such organizations to provide in-home services each year to some 10 million Americans who are infirm, chronically ill, disabled and dying. Along with its advocacy, NAHC is committed to excellence in every respect and provides information to help its members maintain the highest quality of care. To learn more about NAHC, visit and

SOURCE National Association for Home Care & Hospice

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