Many hospitals prefer the voluntary approach used by Medicare’s Bundled Payments for Care Improvement initiative, an extension of which is expected to be proposed soon.


Aug. 11—The Trump administration appears set to cancel at least two mandatory Medicare bundled payment programs, according to a preliminary federal notice.

The website for the Office of Management and Budget, which reviews regulations shortly before they are publicly issued, posted a notice Aug. 10 that it was considering a proposed rule titled “Cancellation of Advancing Care Coordination through Episode Payment and Cardiac Rehabilitation Incentive Payment Models; Changes to Comprehensive Care for Joint Replacement Payment Model.”

Asked to clarify the proposed rule, a Centers for Medicare & Medicaid Services (CMS) spokesman said the agency does not comment on “pending rules or regulations.”

The Episode Payment Model (EPM) and Cardiac Rehabilitation Model (CRM), both of which CMS has delayed twice in recent months, were supposed to launch in January 2018. The changes would affect 860 hospitals already in CJR and 1,120 in the two other mandatory models, according to CMS figures.

Darcie Hurteau, a director for advisory company DataGen, was not surprised that CMS apparently is canceling the EPM and CRM programs, although it is less clear whether the agency is moving to either curtail or make voluntary the CJR model, which started in the summer of 2016 and was Medicare’s first mandatory payment model.

“I’m sure there will be hospitals out there that will be relieved by it, but being mandatory, they were trying to do the right thing by trying to get their team together and getting situated [to comply] sooner rather than later,” Hurteau said in an interview.

Particularly vulnerable to payment cuts under some mandatory models were small-volume hospitals, Hurteau said.

“For those types of hospitals, [voluntary models are] a good thing,” Hurteau said.

Clay Richards, CEO of naviHealth, noted that the fate of the bundled payment programs is unclear based on the scant information from OMB but said changes had been expected.

“This administration has been pretty clear that the way they would like to move to value-based care is more the voluntary model where providers can move into the [value-based] markets at the rate that they desire, versus [the Center for Medicare & Medicaid Innovation] mandating some of those changes,” Richards said.

The apparent retreat from mandatory payment models followed negative comments by Tom Price, MD, secretary of the U.S. Department of Health and Human Services, in 2016, when he was a member of Congress.

Many hospitals prefer the voluntary approach used by Medicare’s Bundled Payments for Care Improvement (BPCI) initiative.

“If this is postponed or changed in another way, I don’t see it doing anything but accelerating the participation in BPCI,” Richards said.

Many of Hurteau’s client hospitals have performed well enough in CJR early reporting to qualify for payment bonuses, although Richards said it is still too early to assess the performance of his client-hospitals. After the bonus-only first year, all hospitals in CJR face an initial 3 percent cut to their Medicare rates with a chance to earn that and more back if they meet the program’s reporting and performance requirements.

“Regardless of this becoming a voluntary versus a mandatory program, they would continue because at this point they have been in the program for over a year so they are well underway, they are seeing the benefits for their patients and for their bottom line and are restructuring,” Hurteau said.

Hospital Approaches

The uncertainty over the future of CJR means hospitals should continue their complex and costly efforts to meet its requirements, Hurteau said.

Hospitals are still awaiting rules for a planned extension of the long-running BPCI program, which terminates at the end of 2017. If participation is still offered, hospitals that had been planning to meet mandatory EPM and CR requirements could push their preparation efforts into BPCI.

“Once the structure of the proposed rules come out, spend time—if your motivation is to engage in these programs—to figure out where you want to participate, and CMS will give you that flexibility,” Hurteau.

For those worried that the end of mandatory bundles could slow the movement toward value-based payment, an extended BPCI program could garner much more participation nationwide than even the mandatory bundled payment programs, Hurteau noted. The BPCI model directs $10 billion in annual spending, compared to about $2.5 billion in CJR.

Hospital Concerns

Hospitals and their advocacy groups had been split on the use of mandatory models, according to comments submitted on the March 20 interim final rule with comment period that delayed both the effective date of a rule governing the mandatory models and the start date of the models.

For instance, the Association of American Medical Colleges (AAMC) warned CMS that any further delay in the mandatory models beyond Jan. 1 may prevent EPM and CJR Track 1 hospitals from obtaining advanced alternative payment model status for 2018 under the Medicare Access and CHIP Reauthorization Act of 2015.

But the Federation of American Hospitals (FAH) urged evaluation of hospitals’ CJR experiences “before even considering expanding that model.”

“Simply put, this is too fast and too soon,” wrote Charles Kahn III, president and CEO of FAH, which represents for-profit hospitals.

State hospital associations broadly opposed the new mandatory bundles.

The Missouri Hospital Association (MHA) panned the new models and said CMS “treats the nation’s hospitals as ‘lab rats’ in the experimentation, with hospitals randomly assigned to implement components of a growing number of complex CMS initiatives.”

“CMS’s assignments and their unforeseen outcomes can affect a hospital’s ability to survive or thrive,” Daniel Landon, senior vice president of MHA, wrote to CMS.

Individual hospitals and systems also expressed their continued opposition to mandatory participation for organizations in randomly selected areas.

For instance, Presbyterian Healthcare Services of New Mexico said the mandatory models “will force many providers who lack familiarity, experience, or proper infrastructure to support care redesign efforts into a bundled payment system.”

Mandatory models impede collaboration, affect patient safety, incentivize underutilization, and reduce access for the sickest patients, according to Aurora Health Care, a 15-hospital, not-for-profit integrated delivery network in Wisconsin.

“For instance, it is unfathomable yet conceivable under the mandatory CJR model that some hospitals may be forced to contemplate avoiding sending patients who have complicated medical problems and decreased probability of recovery to the SNF [skilled nursing facility] because they are more likely to lower the hospital’s performance scores,” wrote Patrick Falvey, PhD, executive vice president and chief transformation officer for Aurora.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, August 11, 2017