CMS Cancels Episode Payment Models: Now What?

episode payment modelsBack in June, when the Centers for Medicare & Medicaid Services (CMS) announced it would delay the effective date of the mandatory acute myocardial infarction (AMI) and coronary artery bypass graft (CABG) bundles to January 1, 2018, the agency stated:

[W]e disagree with commenters who suggested that CMS withdraw these models altogether and/or delay them indefinitely…. [W]e believe these models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries receiving care for these common clinical conditions and procedures.

What a difference a summer makes.  On August 17, CMS published a proposed rule to accomplish the following:

(1) Cancel the mandatory Episode Payment Models (EPMs) for AMI and CABG set to take effect on January 1, 2018, in 98 selected metropolitan statistical areas (MSAs).

(2) Cancel the Cardiac Rehabilitation Incentive Payment Model (CR), which would pay providers in 90 MSAs to encourage the use of cardiac rehab following an AMI or CABG.

(3)  Cancel the expansion of the Comprehensive Care for Joint Replacement Program (CJR) to include surgeries for hip fractures.

(4) Terminate mandatory participation in CJR for hospitals in 33 of the 67 MSAs now subject to the program, as well as rural and low-volume hospitals in the remaining 34 MSAs.  The list of impacted MSAs is included in the proposed rule.  CMS also proposes to make several adjustments to CJR based on first-year experience.

As explanation, CMS stated the agency is “concerned that engaging in large mandatory episode payment model efforts at this time may impede our ability to engage providers, such as hospitals, in future voluntary efforts.”  The proposed rule also makes a general reference to comments previously received challenging various aspects of these programs, while not explaining why any of these concerns necessitate the programs’ cancellations.

With respect to EPMs, CR, and the expansion of CJR to include hip surgeries, CMS stated it considered, but rejected, the option of converting these programs from mandatory to voluntary participation.  CMS believes there are too many unresolved issues in the model designs to warrant such action.

CMS, however, will afford those hospitals in the no-longer-mandatory CJR MSAs, as well as rural and low-volume hospitals in the still mandatory MSAs, to elect to remain in the program.  These hospitals will be required to deliver such written election to CMS between January 1 and January 31, 2018, in a manner to be specified by the agency.

According to CMS, scaling back CJR will reduce expected Medicare savings from that program by $90 million, from $294 million to $204 million.  The agency, however, makes no mention of the $159 million in savings it previously had projected for EPMs (80 FR 600, Jan. 3, 2017) nor the anticipated “spillover” effect from changes in providers’ behaviors.

Noting that some providers intend to rely on their participation in EPMs or CJR to avoid the Merit-Based Incentive Payment System (MIPS) in 2018, CMS states in the proposed rule that the Center for Medicare and Medicaid Innovation expects to announce another opportunity for providers to participate in the voluntary Bundled Payment for Care Improvement (BPCI) starting in 2018.  Those providers that apply for, and are accepted into, this round of BPCI may then be able to meet the requirements for participation in an Advanced Alternative Payment Model instead of having to participate in MIPS.

Finally, CMS explains that it is not slamming the door on future mandatory bundled payments; it is only slowing down the process to address design issues.  However, the agency offers no timeline for launching new and improved programs.

Despite CMS’ proposal to significantly scale back mandatory bundled payments, other payers’ interest in these alternative payment models continues to grow.  Survey results released by the National Business Group on Health in early August indicate more employers are looking to incorporate bundled payments into their plan designs.  Also, more states are looking to incorporate bundled payments in their Medicaid programs.  Given how this payment model effectively guarantees cost savings due to discounting and target pricing, bundled payments are here to stay, regardless of how CMS may act in the future.

We will keep you updated regarding CMS’ proposed rule and other developments relating to bundled payments and other alternative payment models.

If you have questions about episode payment models or would like to request a speaker on this topic for your organization or event, contact one of our PYA executives below at (800) 270-9629.

 


Martie Ross

Martie Ross

Principal

David McMillan

David McMillan

Principal

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