After throwing out a plan for bundled Medicare payments drawn up by the previous administration, the Centers for Medicare and Medicaid Services (CMS) is launching a new take on how to move from fee-for-service to value-based care. The new bundled payment program emphasizes voluntary participation that is aimed at reducing paperwork and overhead for providers who are not yet ready. The idea is to make the program smoother to implement while still meeting the requirements of Congress’ massive Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This law aimed to further value-based payment and fix outdated formulas for physician payment.

Bundled payments are not new for inpatient hospital care, but the new program will combine in one payment both inpatient and outpatient care for 32 types of clinical episodes, such as joint replacement and percutaneous coronary intervention. Like the previous administration’s model, the bundled payments also take quality benchmarks into account, including hospital readmissions and standards of patient safety from the Agency for Healthcare Research and Quality. The reward for providers who coordinate care under this structure is that if they are able to come in under a Medicare spending target for the episode while still meeting the quality standards, they earn a bonus.

CMS expects not only hospitals but also physicians especially to be motivated to participate in the new bundled payment program because it complies with MACRA rules that require them to report performance metrics that CMS uses to adjust payment. As such, the new bundles qualify as an Advanced Alternative Payment Model under MACRA’s Physician Quality Payment Program. The new system goes live on October 1.