Regional Budget Payment Concept

The Centers for Medicare & Medicaid Services (CMS) is interested in seeking input on a concept that promotes accountability for the health of the population in a geographically defined community. Under the Maryland All-Payer Model, CMS and the State of Maryland are testing a new hospital global budget payment program in which all payers in aggregate pay hospitals a fixed annual amount for inpatient and outpatient services, adjusted for quality and irrespective of hospital utilization. CMS is seeking input on the feasibility of similar approaches for other geographical areas, which could include areas smaller than a state. In this concept, providers could receive a prospective budget for the care of the population of a community, and would be accountable for the total cost of care across the entire continuum of care and health outcomes for the entire population. The purpose of this approach would be to support better management of cost and quality for a community’s population, by providing clear revenue expectations and connecting services across outpatient and inpatient sectors. The concept could also incentivize collaboration of provider systems with community-based services outside the traditional health system. Lastly, this concept could encourage the inclusion of rural providers through providing incentives tailored to the unique needs and opportunities presented in rural areas.

Background

Section 1115A of the Social Security Act authorizes the Secretary of Health and Human Services to test innovative models of payment and service delivery that have the potential to reduce program expenditures while preserving or enhancing the quality of care for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries.

CMS is issuing this Request for Information (RFI) to obtain input on the design of multi-payer, regionally- based payment approaches. CMS seeks to build upon lessons learned from the Maryland All-Payer Model. As a result, CMS is interested in learning whether a multi-payer concept similar to the Maryland All-Payer Model could be implemented at a regional level and is seeking information on stakeholders’ interest in this concept.

CMS is seeking input on a concept that improves the delivery of patient-centered care and population health, reduces expenditures, and includes a global budget. A global budget prospectively establishes an annual budget for the health care services delivered to patients by each participating provider, such as hospitals or integrated care networks. CMS is interested in understanding whether this predictable revenue stream could improve quality of care and cost efficiency. Participating providers would be accountable for spending associated with all or most health care services received by the population in a given geographic area and for quality improvement at the individual and population levels. To be most effective, CMS would work with states and private health insurers to achieve multi-payer participation. The overall goals of this concept would be to improve quality, including population health outcomes, and decrease cost by providing participating providers with clear revenue expectations so that they could emphasize value-driven, rather than volume-driven, care and focus on transforming their health care system.

CMS is interested in seeking information on how to set global budgets, including the feasibility, necessity, and potential role of a state or independent organization to negotiate and set the multi-payer prospective global budgets for multiple provider systems within a defined geographic area. Additionally, CMS is interested in seeking information on how to ensure (1) sufficient support for providers for strategies that prioritize population health outcomes defined by local communities, and (2) that a broad range of stakeholders will be represented in the process of setting priorities. CMS is also specifically interested in seeking information on how this concept could serve as an opportunity for rural providers to participate in alternative payment models.

Concept Details

Additional details on the regional budget payment concept will be posted here as they become available.

During the Request for Information submission period, members of the public could submit comments on this concept. The submitted comments are now available (PDF).

For more information, please contact regionalbudgetconcept@cms.hhs.gov.

Additional Information