The Bundled Payments for Care Improvement (BPCI) initiative is designed to test whether bundled payments can reduce Medicare’s costs while maintaining or improving the quality of care. The three-year initiative (which may be extended by up to two years) links payments for services related to an episode of care that is triggered by a hospitalization. BPCI participants may benefit financially from providing services in the bundle more efficiently and are at risk if their costs for the bundle are higher than a historical benchmark.

CMS is testing four models of bundled payments, three of which are being evaluated under this contract. Providers and other entities may participate in BPCI in various ways that differ based on whether they are providing services that initiate a bundle, accepting risk, or providing services to patients in a BPCI bundle. The roles and responsibilities may overlap. An Awardee has an agreement with CMS and accepts risk under the initiative. An Episode Initiator (EI) is a provider where a BPCI episode is initiated and it is either also an Awardee or is affiliated with an Awardee. There are several types of Conveners, which are organizations that perform various functions to facilitate the participation of providers. Awardees and EIs may partner with other providers that deliver care to a beneficiary during a BPCI bundle to coordinate care or share in savings.

The services in each payment bundle and basis of payment; clinical episodes; and several other design features differ depending on the BPCI Model. Under each Model, an episode of care is defined by an inpatient hospitalization for one of the 48 BPCI clinical episodes that are designated by the patient’s Medicare Severity Diagnosis Related Group (MS-DRG).

  • Model 2 EIs are either hospitals or physician group practices (PGPs) and the bundles include the anchor hospitalization, all concurrent professional services, and all other services delivered within the designated episode length of 30, 60, or 90 days. All individual providers that deliver services to any patient in a BPCI episode continue to be paid on a fee-for-service basis. Total spending is reconciled retrospectively against an established target price with the responsible Awardee receiving any savings or repaying any excess spending. 
  • Model 3 EIs are either PGPs or post-acute care providers (home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), or long-term care hospitals (LTCHs)). Episodes start when a patient is admitted to an episode-initiating postacute care provider within 30 days of an anchor hospitalization and the bundle includes all services within the designated episode length. Individual providers are paid on a fee-forservice basis with retrospective reconciliation against an established target price.
  • Model 4 EIs are hospitals. Bundles include the anchor hospitalization, all concurrent professional services, and any readmissions and associated professional services that occur within 30 days of discharge that are not explicitly excluded from the bundle. Awardees are paid a prospectively determined amount that they use to pay individual providers.