Bundled payments, DMEPOS, regulatory reform, and ESRD

By Jonathan Blum, Acting Principal Deputy Administrator and Director, Center for Medicare 

In the past few days, the Centers for Medicare and Medicaid (CMS) announced four critical initiatives that are designed to enhance health care delivery for millions of Medicare beneficiaries by improving care or lowering costs, or both.  Taken together the announcements illustrate the breadth and diversity of efforts underway to ensure a better, stronger, more patient-centered Medicare program.

Last week, we announced a new health care delivery system reform, made possible by the Affordable Care Act, to test how bundling of payments for episodes of care, for example a heart attack or stroke, instead of paying for each test or procedure or physician’s visit, can result in more coordinated, higher quality care for beneficiaries.  By bundling payments for services that beneficiaries receive during an episode of care, CMS hopes to encourage doctors, hospitals, and others  to work together to improve care and health outcomes, while also lowering Medicare costs.  Over 500 organizations, nationwide, have already signed-on to participate.

We also announced a major expansion of the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program.  In its first year of operation, competitive bidding, where prices are based on suppliers’ bids, saved the Medicare program, and taxpayers, over $202 million, while maintaining access to quality products for Medicare beneficiaries in the nine areas of the country where the program launched.   It’s a great example of the Administration’s determination to put the brakes on runaway healthcare costs.  With this expansion in the program, Medicare beneficiaries in 91 major metropolitan areas will save an average of 45 percent on certain DMEPOS items beginning in July.  Between 2013 and 2022, we estimate that the expansion of the DMEPOS program will save Medicare $25.7 billion, while saving beneficiaries, who pay a percentage for medical equipment and supplies, $17.1 billion through lower prices.

This week, we issued a proposed rule which will help health care providers and hospitals to operate more efficiently by getting rid of regulations that are outdated, obsolete, or excessively burdensome.  Many of the rule’s provisions streamline requirements that health care providers must meet in order to participate in the Medicare and Medicaid programs, without jeopardizing patient safety, and they will save providers nearly $676 million annually.  Just as important, by eliminating burdensome requirements, health care providers can improve the quality of health care delivery for Medicare beneficiaries by spending more time focusing on patient care and less time filling out forms.

Finally this week, we announced the Comprehensive End-Stage Renal Disease (ESRD) Care Initiative.  It will help identify, test and evaluate new ways to improve care for Medicare beneficiaries living with ESRD.  We’ll be working with the health care provider community to care for a population that significant and complex health care needs.  Through better care coordination, beneficiaries can more easily navigate the multiple providers involved in their care, ultimately improving their health outcomes.

These four initiatives demonstrate that CMS is employing new and novel tools and programs, thinking outside the box and beyond the usual way of doing things, in order to improve health care delivery for people with Medicare and, in the process, strengthen the Medicare program for current and future beneficiaries.

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