Question:

Under the Affordable Care Act (“ACA”), individuals who sign up on the health insurance exchanges by December 24 will be covered on January 1. 2014.  Does January 1, 2014 have any other significance under the ACA?

Answer:

Yes, but first, a little background.  The ACA created the CMS Innovation Center to test service and delivery models.  The Innovation Center developed the Bundled Payments for Care Improvement initiative (“BPCI”), which includes Models 1, 2, 3 and 4.  The Models link payments for services beneficiaries receive during an episode of care.

Model 1 (participants provide a discount to Medicare from the usual Part A hospital inpatient payments) began for the first set of participants in April 2013, and for the second set of participants on January 1, 2014.

Models 2 and 3 participants (retrospective bundled payment arrangements in which actual expenditures on beneficiaries are reconciled against a “target price” for an episode of care – if a participant is under the target price for a beneficiary, it keeps the difference, but if over the target price, pays the difference to CMS) as well Model 4 participants (a prospective bundled payment arrangement in which a lump sum payment is made to a provider for the entire episode of care) began Phase 2, which is the risk-bearing period, on either October 1, 2013 or January 1, 2014.

Therefore, as of January 1, 2014, all participants in Models 1, 2, 3 and 4 are “live” and in the risk?bearing period.