A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services). CMS uses separate PPSs for reimbursement to acute inpatient hospitals, home health agencies, hospice, hospital outpatient, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities. See Related Links below for information about each specific PPS.
Zipcode to Carrier Locality File
This file is primarily intended to map Zip Codes to CMS carriers and localities. This file will also map Zip Codes to their State. In addition, this file contains an urban, rural or a low density (qualified) area Zip Code indicator.
Provider Center
For a one-stop resource web page focused on the informational needs and interests of Medicare Fee-for-Service (FFS) providers, including physicians, other practitioners and suppliers, go to the Provider Center (see under "Related Links" below).
Updated 1/20/2018
The following original NCSL Issue brief has been distributed to legislators and legislative staff across the country.
Episode-of-Care Payments - PDF File |
Colorado Supplement: Episode-of-Care Payments - PDF File To read portable document format (.PDF) files, use Adobe Acrobat Reader.
Cost Containment Strategy and Logic
Episode-based payments are at an early stage of development and use, but interest in them is growing. In contrast to
traditional fee-for-service reimbursement where providers are paid separately for each service, an episode-of care payment covers all the care a patient receives in the course of treatment for a specific illness, condition or medical event. Examples of episodes of care for which a single, bundled payment can be made include all physician, inpatient and outpatient care for a knee or hip replacement, pregnancy and delivery, or heart attack. Savings
can be realized in three ways: 1) by negotiating a payment so the total cost will be less than fee-for-service; 2) by agreeing with providers that any savings that arise because total expenditures under episode-of-care payment are less than they would have been under fee-for-service will be shared between the payer and providers; and/or 3) from savings that arise because no additional payments will be made for the cost of treating complications of care, as
would normally be the case under fee-for-service.
Episode-of-care payments also are known as case rates, evidence-based case rates, condition-specific capitation and episode-based bundled payments.
Summary of Health Cost Containment and Efficiency Strategies- Brief #3- Episode-of-Care Payments
| State/Private Sector Examples | Strategy Description | Target of Cost Containment | Evidence of Effect on Costs |
Maryland, Massachusetts, Minnesota, Arkansas, New York, Oregon and Pennsylvania; CMS national Bundled Payments Care Improvement program (2,100 facilities by 2015) | A single payment for all care to treat a patient with a specific illness, condition or medial event, as opposed to fee-for-service. | Lack of financial incentives for providers to manage the total cost of care for an episode of illness. Inefficient, uncoordinated care. | Limited research shows cost savings for some conditions. Payment mechanism is at an early stage of development. |
Bundled Payments Recent Updates & Publications - 2012-2017 (Use as a supplement to the PDF above)
- HHS under Trump Proposes Eliminating or Changing Mandatory Bundled Payment Programs
The Department of Health and Human Services (HHS) has proposed eliminating mandatory bundled payment in several areas of healthcare including cardiac care and joint replacement, according to a rule title posted Aug. 10, 2017. Few details were known initially about the proposed rule as the only information publicly available is the title, “Cancellation of Advancing Care Coordination through Episode Payment and Cardiac Rehabilitation Incentive Payment Models; Changes to Comprehensive Care for Joint Replacement Payment Model.” 8/14/2017
The Rise and Fall of Mandatory Cardiac Bundled Payments- Published by JAMA, January 2018. by Rishi K. Wadhera, MD, MPhil; Robert W. Yeh, MD, MSc; Karen E. Joynt Maddox, MD, MPH
Examining the Impact of Bundled Payments Ahead of Expected New CMS Programs - Industry Survey Explores Healthcare Professionals’ Perceptions of Bundled Payments; indicataes that "participation in bundled payments has improved the quality of care, and anticipation and preparation for new programs remains high." – Posted by Archway Health, Boston, 9/19/2017 *NEW*
- CMS under Obama launches large multi-payer Medicare initiative aimed at improved primary care
New Affordable Care Act initiative, designed to improve quality and cost, gives doctors and patients more control over health care delivery
The Centers for Medicare & Medicaid Services (CMS), on April 11, 2016 "announced its largest-ever initiative to transform and improve how primary care is delivered and paid for in America. The effort, the Comprehensive Primary Care Plus (CPC+) model, will be implemented in up to 20 regions and can accommodate up to 5,000 practices, which would encompass more than 20,000 doctors and clinicians and the 25 million people they serve. The initiative is designed to provide doctors the freedom to care for their patients the way they think will deliver the best outcomes and to pay them for achieving results and improving care." It builds on the Comprehensive Primary Care initiative launched in late 2012. For more information about the CPC+ model, see a fact sheet from CMS. 4/11/2016.
Extending participation in the Bundled Payments for Care Improvement initiative - Read the CMS release by Dr. Patrick Conway, Acting Principal Deputy Administrator and Chief Medical Officer; 4/18/2016
Second Opinion: The crawling pace of doctor-payment reform. by the Bloomberg View editorial board 4/18/2016
Bundled Payments for Care Improvement (BPCI) Initiative: General Information Beginning in January 2013, the Centers for Medicare & Medicaid Services (CMS) announced the initial health care organizations selected to participate in the Bundled Payments for Care Improvement initiative, an innovative new payment model. Under the Bundled Payments for Care Improvement initiative, organizations will enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality, more coordinated care at a lower cost to Medicare. Doctors, hospitals, and other health care providers can apply to participate in this new initiative, which will test four different models of paying for services delivered across an “episode of care.”
CMS announces additional participants in pilot project to improve care and reduce costs for Medicare - August 13, 2015
Over 2,100 participants in performance period of Bundled Payments for Care Improvement initiative. The Centers for Medicare & Medicaid Service (CMS) today announced that over 2,100 acute care hospitals, skilled nursing facilities, physician group practices, long-term care hospitals, inpatient rehabilitation facilities, and home health agencies transitioned from a preparatory period to a risk-bearing implementation period in which they assumed financial risk for episodes of care. The participants include 360 organizations that have entered into agreements with CMS to participate in the Bundled Payments for Care Improvement initiative and an additional 1,755 providers who have partnered with those organizations. CMS defines an episode of care as the set of services provided to treat a clinical condition or procedure, such as a heart bypass surgery or a hip replacement.
The federal BPCI program is summarized by CMS as follows:
Centers for Medicare and Medicaid Services (CMS) announces new Oncology Care Model (OCM). According to CMS, "This model aims to provide higher quality, more highly coordinated oncology care at a lower cost to Medicare." February 16, 2015.
The Secret Sauce for Orthopedics Bundled Payments Success. Health systems and hospitals bracing anxiously for adoption of orthopedics bundled payments should take a close look at Meriter Hospital's success with the value-based payment model. >>>
The Fifth National Bundled Payment Summit, www.BundledPaymentSummit.com, took place on June 3 - 5, 2015 Washington, DC. Another Summit is scheduled for June 2016. The Summits are offered both onsite and live and archived for 6 months over the Internet. [NOTE: This is a commercial event, listed for information only. It is not sponsored or endorsed by NCSL and advertizes substantial fees for participation.] News Service, 12/15/2014.
Uwe Reinhardt Questions Bundled Payment Savings Prospects - A July 2013 Alliance for Health Reform video features Princeton’s Uwe Reinhardt questioning whether bundling payments for medical services might actually lead to higher – not lower – costs. "The ACO's, the accountable care organizations, could create local monopolies that could dictate to you what that bundled price would be, and some of us fear that bundled prices might be even more than what the fee-for-service for that bundle would be today. … You really should align all the payers and say, 'Let us jointly negotiate with the ACOs what those bundles should be so that they cannot divide and rule and sort of make us on the buy side weak."
FULL TRANSCRIPT Video (2:58) Read MoreBundled Payment: The Quest for Simplicity in Pricing and Tying Payment to Quality - June 11, 2013 | Issue Brief by Robert Wood Johnson. Local initiatives are showing how new methods for paying for health care can improve quality and control costs. This paper offers four steps that organizations considering a bundled payment pilot should follow.
Local initiatives are showing how new methods for paying for health care can improve quality and control costs. One strategy, called bundled payment, assigns a fixed payment to cover a set of services, such as a surgery or a patient’s diabetes care, over a defined time period. Bundled payments encourage providers to manage costs, while meeting standards of high-quality care.
Though the strategy sounds simple, implementing a different way to pay for care across health systems and communities is a complex undertaking. This brief from Aligning Forces for Quality (AF4Q), the Robert Wood Johnson Foundation’s signature effort to lift the overall quality of health care in targeted communities, examines challenges and shares lessons learned from two AF4Q communities in South Central Pennsylvania and Wisconsin.Bundled Payment in Medicare: Promise, Peril, and Practice - A new report and meeting session by the National Health Policy Forum - April 2012. The Center for Medicare & Medicaid Innovation (CMMI) in the Centers for Medicare & Medicaid Services (CMS) is currently in the process of implementing the Bundled Payments for Care Improvement (BPCI) initiative. Under this initiative, CMMI has received (and continues to receive) applications from eligible participants for four broadly defined bundled payment models that will combine payments for multiple services (depending on the model) during an episode of care. Among the goals of the BPCI are fostering quality improvement while decreasing the cost of an episode of care, giving providers flexibility to redesign care to meet the needs of their community, and removing barriers and provide opportunity for partnerships among providers and other stakeholders. [9 pp, PDF]
Testing PROMETHEUS Payment. The Health Care Incentives Improvement Institute furthered the development and pilot testing of its Prometheus bundled payment model. Researchers at RAND and the Harvard School of Public Health evaluated the initiative at three pilot sites. Posted Jan. 2014.
- The PROMETHEUS Bundled Payment Experiment: Slow Start Shows Problems In Implementing New Payment Models- Health Affairs, 11/11.
About this NCSL project
NCSL’s Health Cost Containment and Efficiency Series describes two dozen alternative policy approaches, with an emphasis on documented and fiscally calculated results. The project is housed at the NCSL Health Program in Denver, Colorado. It is led by Richard Cauchi (Program Director) and Martha King (Group Director) with Ashley Noble providing updated research (2013-present). Barbara Yondorf was lead researcher (2009-2012).
NCSL gratefully acknowledges the financial support for this publication series from 2010-2012 by The Colorado Health Foundation and Rose Community Foundation of Denver, Colorado