CMS Program Bundles Payments For Physician, Hospital Services

CMS on Friday announced plans to launch athree-year Medicare pilot project in 2009 that will test a bundled-paymentsystem in which physicians and hospitals are paid a single amount for allservices associated with surgical procedures, CQ HealthBeat reports. CMS currently payshospitals a pre-set amount for services, but those payments do not includephysician services. Under the pilot program, providers would receive a singlepayment for Medicare Part A, which covers hospital services, and Medicare PartB, which covers physician services.

CMS in astatement said, "The physicians who care for the patient during the stayare paid separately under the Medicare Physician Fee Schedule for each servicethey perform," adding, "The separate payment systems can lead toconflicting incentives that may affect decisions about what care will beprovided."

The program will be launched in as many as 15 markets in four states -- Colorado, New Mexico, Oklahoma and Texas-- beginning Jan. 1, 2009, and will involve 28 cardiac and nine orthopedicinpatient surgical services. A CMS spokesperson said the four states werechosen because Medicare administrative contractors there were prepared toparticipate in the program starting Jan. 1, 2009. CMS also aims to publiclyrelease cost and quality information about the medical services to determinewhether such data draw more beneficiaries and physician referrals to thefacilities involved.

CMS acting Administrator Kerry Weems said, "CMS expects to demonstrate howto not only better coordinate inpatient care, but to also achieve savings inthe delivery of that care that can ultimately be shared betweenproviders."

James Bentley, senior vice president for policy planning at the American Hospital Association, said the pilot program should be a goodexperiment to show how well physicians and hospitals cooperate, but he added,"We need to find out if there are multiple models that work" (Reichard,CQ HealthBeat, 5/16).

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