stethoscope on a calculator

When Tom Price assumes the top post at the U.S. Department of Health and Human Services (HHS) later this month (subject to Senate confirmation), the ink will barely be dry on a final rule issued by the Centers for Medicare & Medicaid Services (CMS) mandating hospital participation in two new cardiac episode-based payment models (EPMs) and an expansion of the Comprehensive Care for Joint Replacement (CCJR) program that began in April 2016. Under the Obama administration, HHS has ambitiously moved to tie federal Medicare expenditures to value and quality outcomes and transition providers to alternative payment models, such as EPMs. But the future of these models is uncertain.

The rule tracks closely CMS’s July 2016 proposed rule and reveals the 98 metropolitan statistical areas (MSAs) mandated to participate in bundled payment models for acute myocardial infarction (AMI) and coronary artery bypass graft (CABG). It also extends CCJR to certain surgical hip/femur fractures. Through the mandatory models, CMS seeks to gain additional experience with episode-based approaches for hospitals with diverse characteristics. And arguably, such models only succeed if less efficient hospitals are incentivized to change through mandatory participation.

Many, including Price, believe the mandatory models represent experiments with Americans’ health that exceed the authority granted by the Affordable Care Act to the Center for Medicare & Medicaid Innovation (CMMI) to test new models and conduct demonstrations. Price, an orthopedic surgeon, was the first of 179 members of Congress to sign a September 29, 2016 letter to Andrew Slavitt, acting administrator of CMS, and Patrick Conway, M.D., chief medical officer of CMMI, criticizing CCJR and the July proposed rule. But the potential savings are big, estimated by CMS to be $159 million over the initial performance period, and a new study of CCJR demonstrates the potential for savings through EPMs without diminishing the quality of care.

The new cardiac EPMs have a five-year performance period beginning July 1, 2017 and ending December 31, 2021. During this performance period each episode will begin with an inpatient stay and generally include all payments through 90 days post discharge. During each performance year, CMS will pay for services on a fee-for-service basis, but at the completion of the performance year, CMS will calculate the amount due to or from the hospital. In response to comments to the proposed rule, CMS is delaying the implementation of downside risk (or obligation to pay CMS) by nine months until episodes beginning October 1, 2018. The rule, however, does allow for participants to assume downside risk as early as January 1, 2018, to qualify as an Advanced Alternative Payment Model under the Quality Payment Program introduced by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The rule also finalizes incentives for cardiac rehabilitation in 90 MSAs, half of which are subject to the mandatory cardiac bundles.

Success in bundled payment models requires strategic planning and alignments, which are not quickly or easily implemented. So, even though the future of the new EPMs is in question, providers drafted for participation should evaluate their readiness for the changes (maybe) coming. And hospitals eligible for the cardiac rehabilitation incentives should determine how they may capture the additional revenues available through coordinating cardiac rehabilitation and achieving patient adherence to cardiac rehabilitation treatment plans.