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r-wiitalaHealthcare providers may now apply to participate in a new program known as the Bundled Payments for Care Improvement Initiative (shortened to Bundled Payments Initiative [BPI]).

The BPI (to be implemented by the new Center for Medicare and Medicaid Innovation) will align payments for services delivered across an episode of care, rather than paying for them separately.

Although it’s too soon to know whether, and how, the BPI will affect the review activities of the Recovery Auditor Contractors, it’s not too soon to begin evaluating certain areas that could be affected. These, and details of the BPI, are provided below.

How it Works

Obviously, the BPI will eliminate the current method of issuing separate payments to hospitals, physicians and other providers. As stated above, reimbursement will center on the episode of care-a package of services that patients receive for a specific medical condition during a hospital stay and/or recovery. Instead of a procedure generating multiple claims from multiple providers, the entire team will receive a bundled payment.

Providers can define their own episode of care and determine which services they would bundle together-as long as they use one of the following models:

  • Model 1: Acute care hospital stay only;
  • Model 2: Acute care hospital stay plus associated post-acute care stay;
  • Model 3: Only the post-acute care, beginning with the initiation of post-acute care services after discharge from an acute inpatient stay;
  • Model 4: All services furnished during an inpatient stay by the hospital, physicians and other practitioners.

Applicants also would propose the target price-an amount set by applying a discount to total costs for a similar episode of care as determined from historical data.  At the episode’s conclusion, the total payments would be compared with the target price.  Organizations that wish to apply to participate must submit a nonbinding letter of intent.

The BPI and RAC Activities

Before applying, providers should answer several questions, including the following:

  • Do you really understand the state (or quality) of your facility’s current documentation as well as its coding and billing practices?
  • Are there any known deficiencies that will be exposed during participation in the BPI? For example, if your facility struggles with documentation to support accurate MS-DRG assignment, will your organization be “held harmless” from exposure to improper payments if compliance violations are revealed?
  • Do you understand the current state (or quality) of documentation, coding and billing practices of the doctors and suppliers that will be part of your team? Will they also be held harmless from exposure to improper payments if compliance violations for their services are discovered?
  • Will your RAC coordinators and internal auditors be required to participate in this process? If so, what might be the impact on current compliance activities and workloads?
  • And, finally, will the BPI require less emphasis or more emphasis on coding? Will providers still be required to report exact codes to describe the care provided or are alternative reporting mechanisms on the horizon? What, if any, effect will that have on the future of RAC evaluations?

Clearly, the BPI represents a significant step toward cost containment and improving quality of care for the Medicare program, and no one can argue with those goals. Many more questions than the above will surface as the BPI unfolds, but it will be worthwhile to analyze how it may affect RAC activities in your organizations.

For More Information

A fact sheet about the initiative, which includes a table comparing the key features of the models, is available at http://innovations.cms.gov/documents/pdf/Fact-Sheet-Bundled-Payment-FINAL82311.pdf. The following web site also provides important details http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.

About the Author

Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.

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Using Data Mining as a Component of Audit Defense


Randy Wiitala, BS, MT (ASCP)

Randy Wiitala, BS, MT (ASCP) conducts CPT coding and chargemaster assessments, reviews provider operations for regulatory agency compliance, evaluates administrative policies and procedures and assists in the development of quality-assurance programs. He's also a frequent seminar presenter, speaking to hospitals, corporations, clinics, state hospital associations and professional organizations. These educational programs cover a variety of areas, such as coding, regulatory compliance and reimbursement for laboratories; chargemaster system management; and APCs. Randy contributes to a number of MedLearn books, as well as the Laboratory Compliance Manager newsletter. He is the project lead on MedLearn's RAC Outpatient Data Analytics. He is a member of the American Society of Clinical Pathologists, the National Certification Agency and Healthcare Financial Management.

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