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January 2016

A Surgeon’s Guide to Bundled Payment Models for Episodes of Care

Author Affiliations
  • 1Value-Based Delivery, Northwestern Memorial HealthCare, Chicago, Illinois
  • 2 Managed Care, Northwestern Memorial HealthCare, Chicago, Illinois
  • 3Comprehensive Transplant Center, Feinberg School of Medicine, Northwestern University, Chicago, Illinois
JAMA Surg. 2016;151(1):3-4. doi:10.1001/jamasurg.2015.2779

The Patient Protection and Affordable Care Act (Public Law 111-148) has created several provisions and programs that link payments to quality outcomes, including establishment of the Center for Medicare and Medicaid Innovation (CMMI), to support the development of innovative models that achieve the “triple aim” (better care for patients, better health for our communities, and lowering the per capita costs of health care).1 Both the executive and legislative branches of the US government have restated their commitment to expansion of value-based delivery (VBD), shifting from volume-based fee-for-service (FFS) to fee-for-value (FFV) models. In January 2015, the Department of Health and Human Services made a commitment to have 50% of all Medicare payments tied to quality or value through alternative payment models by 2018 and 90% of all remaining Medicare FFS payments tied to value or quality.2 In March 2015, the House passed, with bipartisan support, the Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015, which included a long-awaited fix to replace the sustainable growth rate formula. The Centers for Medicare and Medicaid Services Office of the Actuary notes that there are such favorable incentives for adoption of VBD models embedded in this legislation that by 2019, payments to physicians participating in alternative payment models would constitute 60% of Medicare physician spending with continued increases thereafter.3 As continued evidence of the federal commitment to VBD, in July 2015, the Centers for Medicare and Medicaid Services announced the launch of the Comprehensive Care for Joint Replacement, a mandatory orthopedic bundled payment program proposed for 75 geographic areas defined by metropolitan statistical areas.4 The commitment to VBD models is not limited to Medicare. Both state Medicaid programs and the commercial payer industry, including self-insured employers, have also engaged in payment reform strategies that include a variety of value-based constructs.