Opportunities and Challenges for Episode-Based Payment
NEJM | August 24, 2011 | Topics: Cost of Health Care, Health Care Delivery
Robert E. Mechanic, M.B.A.
Episode-based payment in which reimbursement for medical services delivered during defined episodes of care is bundled together is one of several payment reforms contained in the Affordable Care Act (ACA). Episodes cover a specified period that ranges from a few days to a year, during which patients may receive care from multiple providers.
Is it possible to anticipate the health outcome and possible costs to fall within said 30-day post-discharge period?
PHP:
The objective is to create incentives for efficiency and better care coordination.
But episode-based payment is much more complex to administer than fee for service or capitation and thus faces substantial implementation challenges.
In 1991, the Centers for Medicare and Medicaid Services (CMS) began an episode-basedpayment experiment for coronary bypass surgery that bundled payments for Medicare Part A and Part B services during admissions, plus readmissions within 72 hours. Although this approach
reduced Medicare spending and improved quality in the seven participating hospitals, the demonstration wasnt expanded because of hospital-industry opposition. Nearly a decade later, CMS began its acute care episode (ACE) demonstration, bundling Part A and Part B payments for 29 cardiac and orthopedic DRGs but only five hospital systems currently participate. Medicares episode-basedpayment initiatives will soon expand significantly, thanks to the ACAs national pilot program that begins in
2013... (if we make it past 2012)