The Centers for Medicare and Medicaid Services (CMS) wrote to the State Medicaid Directors (SMD) to provide information on how states can advance value-based care (VBC) across their health care systems, with a particular focus on Medicaid populations, and to share pathways for adoptions of such approaches with interested states. Included in this letter is information on payments for episodes of care or bundled payments.

The SMD letter notes that bundled payments are increasingly common in cases of childbirth and other discrete treatment episodes that generally include an expected set of services for treating a condition. The letter highlights the Tennessee Episode of Care program, which applies the episodes of care approach to reward high quality and cost-effective acute and specialty-driven care as it relates to maternity care and other health episodes. Tennessee’s Episodes of Care program, implemented in 2014, continues to align provider incentives with patients’ desired health outcomes resulting in maintained or improved quality of care across most episodes while achieving savings.

Authors: Centers for Medicare and Medicaid Services

Letter Issued: September 15, 2020

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