Some industry advisers see a good possibility that the delayed models and CJR will be switched to a voluntary approach.

March 21—Industry advisers are split on the significance of a three-month delay in the start of the newest mandatory bundled payment models.

The Centers for Medicare & Medicaid Services (CMS) on March 20 issued an interim final rule with comment that delayed both the effective date of a rule governing the bundled payment models and the start of the models themselves. The start of an expansion of the Comprehensive Care for Joint Replacement (CJR) model and new bundled payment models for heart attack, cardiac bypass surgery services, and a new cardiac rehabilitation incentive program (collectively known as episode payment models, or EPMs) was pushed back from July 1 to Oct. 1.

CMS said the delay would allow for additional notice and feedback so it could tweak the program as needed. Among the areas on which the agency sought comment was the possibility of delaying the new models to Jan. 1, 2018.

Industry advisers saw varying levels of significance in the rule.

“I place my bets that it’s unlikely the mandatory model will happen,” Carter Paine, COO at naviHealth, said after noting that the delay followed previous criticism of mandatory models by Tom Price, secretary of the U.S. Department of Health and Human Services.

But others noted that some delays are expected in a new administration as newly confirmed leaders like Price and CMS Administrator Seema Verma figure out how they want to implement new programs.

“A delay is basically expected at this point because the agency is not quite running at full steam yet,” said Danielle Lloyd, vice president for policy development and analysis at Premier, a hospital quality improvement company. “It’s too early to jump to the conclusion that the mandatory models are out.”

Deirdre Baggot, PhD, formerly a CMS expert reviewer for CJR’s predecessor program—the voluntary Bundled Payments for Care Improvement (BPCI)—and now a principal at ECG, also was not surprised by the delay. She noted that both the Medicare Acute Care Episode demonstration and BPCI were delayed more than a year from their original start dates.

However, Baggot agreed that a shift to voluntary participation could occur in at least the new bundled payment models.

“The most likely scenario is changes that would enable EPM to be voluntary,” Baggot said. “That’s one of the most unpopular design features of EPM.”

Industry advisers also are watching for rules this spring outlining a 2018 successor to BPCI. One possible EPM change, said Dave Terry, CEO of Archway Health, could be to combine it with that new voluntary model.

Price underscored during his January confirmation hearing that he remained opposed to mandatory CMS payment models. For instance, Price said the CJR model would “potentially” cut Medicare enrollees’ promised benefits. Verma didn’t address mandatory payment models during her confirmation hearing.

Some hospital advocates also have come out in opposition to mandatory models, including the American Hospital Association, which said in a statement issued when the now-delayed models were finalized: “This is too much, too soon.”

Delay Impacts

Amid the delay, Premier is telling hospitals subject to mandatory participation in the coming models—including 860 hospitals already in CJR and 1,120 others for the EPM models—that they should continue their preparations.

“We’re certainly of the mind that it is better to be prepared than caught off-guard,” Lloyd said.

Premier members have started their preparation even though CMS has not sent needed data files against which their performance will be compared in the new bundles. Early preparation can include improving care coordination, establishing better post-acute-care provider relationships, and determining whether any risk sharing or gainsharing will be used with physicians.

However, Terry said he has seen a lack of widespread “engagement” by hospitals in CJR and the EPM programs because most don’t have the volume in those procedures for the models to have much of a financial impact. He blamed the lack of hospital focus on “watered down” rules, including the lack of penalties in their first years and front-loading bonus payments for the small share of hospitals that have large volumes affected by the programs.

“Some of them got engaged early, but many of them are waiting for the risk until it hits their radar screen as the top five or 10 things that they are worried about,” Terry said.

An unknown number of physicians also will be impacted by the delay because those working under the expanded CJR bundle or in a qualifying track of the EPMs could receive 5 percent Medicare bonuses as participants in an designated advanced alternative payment model (APM), according to terms of the Medicare Access and CHIP Reauthorization Act (MACRA). The delay makes it unlikely any would be able to receive a bonus for their 2017 participation in an APM, Lloyd said.

The delay could also impact the existing CJR bundle, which launched in April 2016 and places hospitals at risk for all Medicare spending associated with hip and knee replacements and any charges within 90 days of discharge. Some advisers now view it as possible—although less likely—that CMS also could shift that model to a voluntary approach.

Future Bundles

With BPCI scheduled to end in September 2018, a Jan. 3 CMS rule stated that the new voluntary model (or models) will build on the BPCI initiative and meet the criteria to be an advanced APM.

“We think that is more a Republican idea to have a voluntary program, have capitation rates introduced, and let the markets decide whether or not they want to participate,” Paine said.

The Physician-Focused Technical Advisory Committee also will recommend new models to Price.

CMS would seek to address provider concerns with the earlier version of BPCI, including lags in provider data from CMS, a self-comparison benchmarking model that punishes providers that improve results, and a lack of clarity in how the spending trend is calculated.

Bundled payments have spread slowly among health plans. For instance, a 2016 McKesson report found bundled payments account for 11 percent of healthcare payments, but only half of health plans and 40 percent of providers said they were ready to implement bundles.

If CMS moves away from mandatory bundles, then the total number of hospitals in such models will decrease but the number in voluntary models should steadily increase, according to Paine. Baggot said the overall number of hospitals and physicians in bundles actually could increase because a move to voluntary models would open participation nationally at a time when many are looking to join APMs that qualify them for the MACRA bonus payment.

“Do I see CJR becoming voluntary or opening more broadly? I do, both CJR and EPMs,” Baggot said.

The surge in CMS activity around bundled payments and the increasing amounts of data on their results have greatly increased interest in the models in recent months among health plans and self-insured employers, according to advisers.

Paine said if the mandatory models are canceled, hospitals can switch their preparation to participating in the next round of voluntary BPCI or can pitch a bundled payment arrangement to a commercial insurer.

Such an arrangement is “where you can protect your inpatient fee schedule, maybe even get an increase, and have the ability to essentially cut costs on the post-acute side,” Paine said.  

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

Publication Date: Tuesday, March 21, 2017