Which CMS Bundled Payment Model Offers Best Balance of Risk and Reward?

Which CMS Bundled Payment Model Offers Best Balance of Risk and Reward?

Model 4 of the new CMS bundled payments program offers "the best balance of risk and reward" as well as opportunities for gainsharing, advises Jim Reilly, managing partner with TRG Health Care Solutions. This option appears to have the highest level of interest among providers Reilly has communicated with.

The four models included in the new CMS initiative are:

  • Model 1: Retrospective bundled payment for all inpatient hospital stays;
  • Model 2: Retrospective payment model for the acute inpatient hospital stays AND post-acute care;
  • Model 3: Retrospective payment model for post-acute care only;
  • Model 4: Prospective payment for select acute care hospital stay only – Providers select which MS-DRGs to include

The veteran of previous CMS forays into bundled payments walked through the four models and timelines during last month’s webinar Evaluating CMS’ Bundled Payment Initiative: Operational, Financial and Clinical Considerations.

In case you missed this webinar, you still have a chance to watch this highly-rated program.

Register to view the conference today or order your training DVD or CD:

Evaluating CMS' Bundled Payment Initiative: Operational, Financial and Clinical Considerations

Hospitals are more familiar with bundled payments than physician practices, who are traditionally paid by CMS on a fee for service basis, noted Reilly. CMS hopes the new bundled pricing initiative will incentivize hospitals and physicians to work more closely together to improve outcomes.

Reilly reported a “neutral to positive” assessment of CMS’s Acute Care Episode (ACE) pilot from the five participants in that recent CMS bundled payments trial. Reilly worked with all five health systems on the ACE project, including Baptist Health System. Model 4 is also most like the ACE model, and offers a prospective payment, in that CMS will pay one fee after the care is delivered.

Reilly posed several questions for providers to consider before committing to participate, including whether bundled payments will effectively align physicians, result in financial gain, improve quality benchmarks and inspire innovation and change in the healthcare industry.

His advice to potential participants? Start educating your physicians on the payment process, and start now: the application is extremely labor-intensive.

You can "attend" this program right in your office and enjoy significant savings — no travel time or hassle; no hotel expenses. It’s so convenient! Invite your staff members to watch the conference. We will send you a DVD or CD-ROM of the conference proceedings or a link to our web site with a username and password. You can log in and view the program right from your computer — any time of the day or night, whenever convenient for you and your colleagues — and benefit from the archived recording of the conference, including the Q&A period.

You'll get to listen to the question and answer session to hear in which circumstances a hospital is better off applying individually for the program as opposed to a system, gain-sharing models out there that can be replicated, how physician-hospital organizations can approach the application for Model 4, what approaches conveners can use to get providers on board and physician payment structures that get physicians on board.

To register for the on-demand re-broadcast of Evaluating CMS' Bundled Payment Initiative: Operational, Financial and Clinical Considerations or order the training DVD or CD-ROM, please visit:

I hope you find it useful.


Melanie Matthews
Executive Vice President
The Healthcare Intelligence Network