The change is not expected to affect hospitals’ shift to value-based care, with industry advocates expecting a large, new Medicare payment program to be established on a voluntary basis.


Aug. 16—The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule this week to eliminate three mandatory Medicare payment models before they launch and to scale back an existing fourth model.

CMS would cut the number of geographic areas in which most hospitals are required to participate in the Comprehensive Care for Joint Replacement (CJR) model from 67 to 34. Additionally, CMS would allow all low-volume and rural hospitals to opt out of CJR.

The change would reduce the number of hospitals that are required to participate in CJR from 800 to 393. CMS estimated that an additional 60 to 80 hospitals will voluntarily participate.

The CJR changes are expected to reduce Medicare savings from $294 million to $204 million over the model’s three remaining years, according to CMS.

CMS also proposed canceling the twice-delayed Episode Payment Models (EPMs) and Cardiac Rehabilitation (CR) incentive payment model, which were scheduled to begin Jan. 1, 2018. CMS projects the change would affect about 1,120 hospitals that would have been required to participate in two EPMs, the Acute Myocardial Infarction and Coronary Artery Bypass Graft models; 860 hospitals that were slated for a third EPM, the Surgical Hip and Femur Fracture Treatment (SHFFT) model; and 1,320 hospitals in the CR model.

CMS instead plans to introduce additional voluntary bundled payment models.

“Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals,” Seema Verma, administrator of CMS, said in a release. “Stakeholders have asked for more input on the design of these models. These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries.”

Hospital Reaction

Hospital advocates generally have reacted favorably to the proposed move away from mandatory bundled payments. Many hospitals have submitted comments to CMS urging such a shift. Specific concerns included the difficulty of succeeding under bundles for unplanned cardiac events compared with planned elective joint surgeries.

“The notion that EPM-mandated hospitals can control and prevent [heart attack] patients from being re-admitted to ”out of network” hospitals is ludicrous and in many instances may not be good patient care,” said Deirdre Baggot, PhD, principal at ECG and a former CMS expert reviewer for the Bundled Payments for Care Improvement Initiative (BPCI). “CMS had a misstep with AMI, I think they are trying to solve for the high readmission rate in the AMI population, which I get, however AMI needs more study.”

Other design elements were expected to leave certain types of hospitals vulnerable to cuts under bundled payments.

“We were predicting some really bad situations for organizations for low volume” in the planned mandatory models, Baggot said in an interview. Such predictions had been born out in the recent first-year results for CJR.

Hospital administrators—including those inside and outside both the already-launched and scheduled mandatory models—have expressed support for the change, said Brian Fuller, vice president of value-based care for naviHealth.

“They view this as positive for them because they can essentially write their own plan, rather than being forced into a mandatory model by CMS,” Fuller said in an interview. “They can voluntarily make sure that they are prepared, make sure that they are making the right decisions for their specific patient populations, for their specific market, and go into voluntary models in the way that they want to intentionally enter into those models.”

Hospitals outside the mandatory models viewed the proposed rollback as lessening potential complications they faced in navigating increasingly overlapping value-based payment projects, Fuller said.

Ashley Thompson, senior vice president of public policy analysis and development for the American Hospital Association, warned that “a mandatory cancellation of the cardiac and SHFFT programs may be disruptive to providers who have expended valuable resources to put these programs in place.”

But Fuller expects hospitals to shift toward participating in the voluntary BPCI program, which is slated to end this year but is likely to be extended and expanded.

“Once that voluntary program is announced, presumably all of those investments translate to a voluntary bundle,” Fuller said. “All of the must-haves that you need to be successful under value-based care translate whether you’re in voluntary or mandatory models.”

Rules implementing the new voluntary model are still expected to be issued this year, said Blair Childs, senior vice president of public affairs for Premier. The CMS rule alluded to other bundled payment models that it expects to propose in 2018, and Childs said the industry can get an idea of what might be in store by examining proposed rules recommended by the Physician-Focused Payment Model Technical Advisory Committee (PTAC). So far, PTAC has recommended the addition of two models as advanced alternative payment models (APMs) under Medicare’s new physician payment system.

The PTAC focus will be part of a shifting “locus of control” for bundled payments from hospitals to physicians under the Trump administration, said François de Brantes, vice-president and director of Altarum's Center for Payment Innovation.

“Now it will be the hospitals who need to figure out how to play nice with physicians,” de Brantes said in an interview.

Childs doubted the change would limit hospitals’ ability to garner Medicare bonus payments for their physicians because the coming extension of BPCI is expected to qualify as an APM, as were the canceled models, under the Medicare Access and CHIP Reauthorization Act. Additionally, he noted that the proposed rule provided more clarity on how hospital-based physicians can qualify for such payments.

Value Shift

Some worried that the move away from mandatory models could signal to hospitals that they do not need to find ways to succeed under value-based payment.

“Our concern has been that this is such a confused time in health care that some will take this as a reason not to proceed and move toward alternative payment models, and that would be a misunderstanding of what is going on here,” Childs said.

Instead, Child views the elimination of mandatory approaches as part of the Trump administration’s desire to allow the market—instead of government—to drive the shift to value-based care.

“We believe if it is market-driven, it will actually get faster uptake,” Childs said   

Fuller has not heard that hospital administrators may be reconsidering their move to value-based care in the wake of the proposed rule.

“The announcement has not scared the industry or signaled to the industry in any way that value-based care is not a direction that health care is moving in; rather it has changed the way they’re thinking about their opportunity under the voluntary programs,” Fuller said.

Concerns that a voluntary bundled payment program might provide data that is less robust or skewed due to self-selection also are overblown, he said. The notion that only the most advanced hospitals would opt to join a voluntary model was valid three years ago.

“Now you see a broader cross-section of the industry that is interested and willing to move in this direction,” Fuller said.

Industry watchers also are tracking how a BPCI extension accommodates a separate CMS proposal to pay for joint surgeries at ambulatory surgery centers. It’s not clear whether that proposal—which CMS has floated informally—would make it more difficult for hospitals to succeed under CJR or voluntary joint replacement bundles, Fuller said.


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

Publication Date: Wednesday, August 16, 2017