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CMS delays expansion of bundled payments

March 20, 2017

The CMS has delayed the expansion of a major bundled payment pilot, Comprehensive Care for Joint Replacement, and the implementation of its bundled payment initiatives for cardiac care from July 1 to Oct. 1, 2017, according to an interim final rule posted to the Federal Register. It also delayed, for a second time, the effective date of a final rule laying out the implementation of CJR and other bundled payment programs, from March 21 to May 20, 2017.

The agency also delayed its Cardiac Rehabilitation Incentive Payment Model and is also weighing whether to push back implementation of all bundled payment initiatives even further, until 2018. These programs are mandatory, and different from the voluntary Bundled Payments for Care Improvement initiative, which is not affected by the interim rule.

The Trump administration’s move to delay mandatory initiatives raises questions about the future of government initiatives to usher healthcare out of fee-for-service operations and into a new age of value-based payment. Such efforts were a hallmark of healthcare reform under the Obama administration, which set the goal of having half of traditional Medicare dollars go through alternative payment models by 2018.

“This additional three-month delay is necessary to allow time for additional review, to ensure that the agency has adequate time to undertake notice and comment rulemaking to modify the policy if modifications are warranted, and to ensure that in such a case participants have a clear understanding of the governing rules and are not required to take needless compliance steps,” the interim rule said.

It added that the delay would give participants more time to prepare for these models and that it would be preferable for payment periods to align with the calendar year. As a result, the CMS said, it is seeking comment on the possibility of delaying the start of cardiac bundles until Jan. 1, 2018. If it pushes the cardiac bundles to a later date, it would also delay the CJR expansion to the same date, it added.

In the CJR program, which rolled out in April 2016 across 800 hospitals in 67 metropolitan areas, Medicare pays providers a single amount to cover all the costs associated with a hip or knee replacement over a 90-day period. The program was slated to expand in July to include repairing hip and femur fractures as well as cardiac care.

The cardiac bundles, a five-year demonstration, would have applied to hospitals in 98 metropolitan areas of the U.S., holding them financially accountable for the costs of all care involved in bypass surgery and heart attacks. They were originally slated to begin in July and end Dec. 31, 2021.

The CMS is seeking comment on “the appropriateness of this delay,” for 30 days after the interim final rule is filed for public inspection–slated for March 21–in the Federal Register, it said.

HHS Secretary Tom Price has staunchly opposed the CMS’ mandatory initiatives, like CJR. When he served in Congress, he criticized the Center for Medicare & Medicaid Innovation, which develops and pilots value-based payment models, and in September was among 179 members of Congress who called on the CMS to “cease all current and future planned mandatory initiatives under the CMMI,” including bundles.

“My guess is they probably don’t feel they can give this issue the kind of attention it needs right now,” said Dr. Ashish Jha, a professor of health policy at the Harvard School of Public Health, pointing to other major issues, like the GOP bill to repeal and replace the Affordable Care Act, dominating healthcare policy right now. “They’re trying to buy time.”

The delays could ultimately presage a decision by the CMS to make these initiatives voluntary, even though it was with good reason that the Obama administration made them mandatory, said Jha.

If participating in these alternative payment models becomes optional, “you’re going to have a huge selection problem,” Jha said. Only providers that believe they can succeed under such models will participate, and in the long run, that will drive costs up, he added. “Not just the CMS, but American taxpayers are going to be worse off for it if they make it voluntary.”

Others counter that voluntary bundled payment programs are more effective than mandatory ones in improving care. “We have found that voluntary models provide a forum for more engaged participation,” said Carolyn Magill, CEO of Remedy Partners, which oversees $5.7 billion in program spending under the CMMI’s voluntary Bundled Payment for Care Improvement initiative and $115 million in its mandatory bundled payment programs.

Because providers that choose to join bundled payment initiatives do so deliberately, and their bundles often cover multiple clinical areas, they understand why it’s important to invest in delivery reform and are much more engaged, Magill said.

By comparison, existing mandatory programs are typically structured around one or a few clinical episodes, Magill said. “They’re not encouraging the systemic change within an organization,” she added.

Out of about 1,200 providers slated to be included in mandatory cardiac episode payment models, or EPMs, about 10% had expressed interest in actively preparing for them, said Dave Terry, CEO of Archway, a company that works with providers on bundled payment initiatives. Providers in the voluntary space were much more engaged, he said.

Hospitals likely will feel varying degrees of the impact of the implementation delay.

UnityPoint Health, a health system spanning nine regions across Iowa, Illinois and Wisconsin, said it plans to move forward with the implementation of these models, according to Sabra Rosener, the system’s vice president for government and external affairs. Five of those regions are participating in CJR, cardiac bundles or the cardiac rehabilitation program.

“Implementation of these models is not something that happens overnight, but instead takes a lot of planning and education to prepare,” Rosener said. UnityPoint Health had already begun working on workflow and operational changes, she added. “UnityPoint Health is not opposed to thoughtful mandatory bundles but we have been stressing the need for an actual start date so we can plan.”

Some might feel a sense of relief, if they were not ready, Jha said. “Hospitals have known it’s coming, but my sense is most have not done that much to prepare, and it will help them to know that there’s more time,” he added.

For other hospitals, the delay may make little difference if the CJR expansion or new cardiac EPMs were not financially significant, said Terry, CEO of Archway. If a hospital doesn’t perform many joint replacements, or receives few heart attack patients, or rarely performs open heart surgery, compared to other service lines, these new payment models have a limited impact.

One area of consensus is that this interim final rule on mandatory payment reforms is not the last the CMS will issue. Whether the agency will delay them again, before October, or transition them into a voluntary model, “I’ll be surprised if this is the final change,” Terry said.

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