Beyond ACOs and Bundled Payments

Abstract

For all the attention paid to accountable care models, few observers have recognized that Medicare is rolling out the core framework of bundled payments within the hospital fee-for-service payment system. Under its hospital value-based purchasing (HVBP) program, Medicare has established the Medicare Spending Per Beneficiary (MSPB) metric, defined as the average Medicare Part A and Part B spending per patient (eg, all traditional Medicare fee-for-service spending outside of prescription drug coverage) from 3 days prior to admission to 30 days after discharge. Hospital value-based purchasing adjusts each hospital’s fee-for-service Medicare reimbursement based on various performance benchmarks, such as MSPB; more than 1400 hospitals will receive reductions in their Medicare payment rates this year.1 Although Medicare has created a number of pay-for-performance programs over the past decade, MSPB represents the first pay-for-efficiency measure embedded within the fee-for-service system to penalize or reward hospitals not just for readmission rates or efficiency within an inpatient stay but for the value of care delivered across the entire continuum.