22 July 2016 REM Medical Properties Trust Payment model considerations Episode-based payment initiatives In an attempt to coordinate care across different settings and generate cost savings, Centers for Medicare and Medicaid (CMS) has expanded its existing use of bundled payment programs with the goal of shifting 50% of traditional Medicare payments into alternative payment models by 2018. Under a bundled payment system, reimbursement for providers is subject to a spending target for all services provided during an episode of care over a defined time period. The current fee-for-service payment system is volume based, with each provider receiving a separate payment for a procedure or service. The main shortcomings of this model include the overuse of services that have better reimbursement rates and the uncoordinated delivery of care across different hospital and post-acute settings. The shift to bundled payments started in 1983 with the introduction of the inpatient prospective payment system (IPPS). Under IPPS, hospitals are reimbursed at a fixed rate per inpatient stay rather than basing reimbursements on reported hospital costs. While initially this system did not impact other providers, officials subsequently launched various demonstration programs and introduced physician services and post-acute providers into the bundling of payments. There are currently two programs (Figure 23) in place that are focused on expanding the use of bundled payments: Bundled Payment for Care Improvement (8PCI) and Comprehensive Care for Joint Replacement (CJR). 'Figure 23: Summary of provisions SKI GR Start date October 2015 April 2016 Participation Voluntary Mandatory Geography National 67 MSAs Duration 3 years S years Clinical episodes 48 episode types Total hip & knee replacement Episode length 30/60/90days 90days Number of participants: Hospitals 415 800 Physidan groups 305 N/A Skilled nursing facilities 723 N/A Savor naa